Chapter 9: Republic of China: Starting from the First Class of Whampoa Chapter 9 Principal Trades Stocks

·

·

·

Protagonist:

Lv Muzhi

It was Lv Muzhi's turn to go in and talk to the Principal. Lv Muzhi straightened his collar, then strode into the Principal's office.

As soon as he entered, Lv Muzhi heard the crackling of the radio; it turned out the Principal was tuning his radio.

"Reporting to the Principal, student Lv Muzhi reporting as ordered!"

The Principal glanced at Lv Muzhi, then continued fiddling with his radio, as if there were something important on the radio he could not miss.

"Sit aside for a moment; we'll talk in a while." The Principal scratched his head; the radio was inexplicably disobedient, crackling incessantly.

Seeing the Principal sweating with anxiety, Lv Muzhi felt there was some urgent matter and that his presence was inappropriate: "Principal, you are busy with affairs; how about the student waits outside?"

The Principal couldn't fix the radio and was at a loss. Looking at Lv Muzhi: "You young people frequently encounter new things; do you know how to fix this radio?"

Seeing the Principal's helpless look, Lv Muzhi felt as if he were seeing a middle-aged or elderly person at a loss with a smartphone.

"Principal, why don't you try slapping the radio hard; it might work normally." Since the Principal had asked first, and boasting cost nothing, Lv Muzhi stood up and suggested tentatively.

The Principal was stunned, then slapped the radio twice with his palm, and it actually returned to normal!

A female voice full of era flavor came from the radio: Broadcasting 'Northern China Victory Bulletin' news: The day before yesterday, a man jumped from a building at the Shanghai Securities and Commodities Exchange building and committed suicide......

While listening to the radio news, the Principal waved his hand at Lv Muzhi, gesturing for him to sit, then took out paper and pen and continued listening to the broadcast.

"Silk industry stocks have fallen for two consecutive weeks; stockholders complain bitterly, and even those heavily in debt have taken the path of suicide."

"Among silk stocks, Xinhe Silk Factory is twelve yuan per share, down five jiao from the previous day...... Shipping stocks have risen somewhat; Kuaitai Shipping is up three jiao per share......"

At this moment, the Principal was more like a student than himself, leaning over the desk recording stock prices, with a seriousness no less than an elementary school student in class.

Lv Muzhi remembered that the Principal had once been a stockbroker in Shanghai; at the height of his fame, he was called the Wolf of the Huangpu River, and the firm he co-founded earned several million yuan, but later the stock disaster struck, and the Principal owed a mountain of debt, unable even to pay his son's tuition.

"He remembers eating but not being beaten......"

Lv Muzhi thought to himself, but of course dared not say it outright.

A quarter of an hour later, the Principal closed his notebook, turned off the radio, regained the dignity of a school principal, and explained his behavior of just listening to stock market news.

"Muzi Ah (Fenghua accent), as a military man, one must not only excel in military affairs but also understand important events at home and abroad. Through the stock market, we can see the development of all industries and understand what is happening in our country. What do you think?"

The Principal was obviously very satisfied with his self-justification and threw a question at Lv Muzhi.

What could Lv Muzhi do? In principle, he should naturally agree with the Principal, but felt it was somewhat against his conscience, so he first praised then criticized: "The Principal is right. What the Principal just said is a sign of a healthy country and can indeed be called a universal truth, but......"

Lv Muzhi spoke half a sentence, paused, causing the Principal to raise his eyebrows.

"But what?"

"But our country is not very healthy. Everyone can see the situation of four divisions and five splits, and the stock market is also extremely deformed. Stock prices cannot represent the true value of the industries behind them. The Principal once ran stocks and must surely understand how much water there is and how much bubble is mixed in."

"Oh? You also study stocks? Tell me more."

Lv Muzhi continued: "Take the rubber boom of 1910. Many compatriot stockholders didn't even know what rubber was, yet rushed to buy, driving up stock prices. That year, how many people were trapped and then lost everything?"

Lv Muzhi's words reminded the Principal of the miserable past from a few years ago when he lost even his undershirt. If it weren't for the Qingtian Party backing him, with so much debt, he might have been caught by the Shanghai Patrol House and thrown in prison!

The past was vivid before his eyes. The Principal nodded: "Muzi, I called you here because I heard your terrain maps are very good. Today, after meeting in the office, I didn't expect you to have your own views on China's stock market. I am very gratified. You are only twenty years old; don't tell me you have also floated and sunk in the stock sea?"

Lv Muzhi shook his head. Before crossing over, he had indeed bought some stocks, but most were trapped. However, the original owner had no capital to participate in the stock market. It was the original owner's father who spent a little money playing small in the stock market.

"In leisure time, the student has read some financial books and studied stock trading. Father once spent several yuan investing in stocks, all lost. Fortunately, the capital invested was not much, otherwise I couldn't afford middle school, nor could I come to this Whampoa Military Academy." Lv Muzhi told the truth, all real circumstances.

The Principal nodded: "Yes, stock trading harms people, harms people! I have decided not to trade anymore, just occasionally listen to some news for a thrill. But you say you have studied stock trading; have you researched any good methods? Let's share with everyone."

Lv Muzhi was dumbfounded. The Principal said he wouldn't trade stocks, but once he started talking about stocks, there was no end, and he actually wanted to inquire about Lv Muzhi's trading techniques.

Now it was good. Lv Muzhi had set himself too high and might not be able to come down.

Seeing the Principal's expectant eyes, Lv Muzhi steeled himself and casually brought out some modern introductory knowledge to bluff his way through.

"Principal, the student has indeed pondered some methods. The student thinks that if stock trading only watches the sporadic numbers of daily rises and falls, it is like viewing a leopard through a tube, seeing only a spot. If one can connect its trend into lines and draw charts to observe, only then can one see the whole picture and grasp the general situation."

Hearing this, the Principal showed great interest: "Chart stock trading? That is novel. Specifically, how to operate?"

Seeing the Principal take the bait, Lv Muzhi felt somewhat relieved and continued: "The student calls it K-line Chart, oh no, a slip of the tongue, it is Candlestick Chart."

"What is a Candlestick Chart? Draw it for me." The Principal hurriedly handed over paper money.

"Look, we record a stock's opening price, closing price, and the day's highest and lowest prices every day."

Lv Muzhi used the Principal's pen to draw a short horizontal line on the paper: "This is called the Opening Price."

He drew another short horizontal line: "This is called the Closing Price. Then connect the two points with a rectangle. If the closing price is higher than the opening price, the rectangle is hollow or colored red, called a 'Yang Line,' indicating a rise. If the closing price is lower than the opening price, the rectangle is filled black, called a 'Yin Line,' indicating a fall."

Next, Lv Muzhi drew thin lines from the top and bottom ends of the rectangle: "Draw a line from the top to the day's highest price; this is called the 'Upper Shadow.' Draw a line from the bottom to the day's lowest price; this is called the 'Lower Shadow.' The price fluctuations within a day and the fierce struggle between bulls and bears are all contained in this one 'candlestick.'"

The Principal watched with unblinking eyes, brows tightly furrowed. At that time, stock trading did not have K-line charts; K-line charts would not be introduced to the stock market until the 1980s of the twentieth century, so it was still very novel to the Principal.

"Wonderful!" The Principal slapped his thigh. "If we draw these 'candlesticks' continuously every day, wouldn't their rise and fall trends, resistance and support, be clear at a glance? Compared to my simple recording of numbers, this is indeed much more clever!"

Seeing the Principal so humble and eager to learn, Lv Muzhi also felt like a teacher: "Candlestick charts have various combination patterns. I have painstakingly summarized many and given them different names, such as: 'Dawn Breaking,' 'Dark Cloud Cover,' 'Three Red Soldiers,' 'Three Black Crows,' and so on...... I will tell them to the Principal one by one..."

The Principal listened as if intoxicated, listening and taking notes.

After listening, he immediately turned to a new page in his notebook and, according to the method taught by Lv Muzhi, tried to convert the prices of several silk stocks and shipping stocks he had recorded over the past days into candlestick charts.

The Principal drew while muttering to himself: "So that's what the line from the day before yesterday meant...... This is Dark Cloud Cover. Don't tell me this shipping stock is about to have bad news? Oh dear, oh dear, I must hurry and send a telegram to Brother Jinjiang to inquire about the inside market!"

The Principal took the candlestick chart he had drawn and was about to go out to send a telegram to Brother Jinjiang, far away in Zhejiang Province. Just as he reached the door, he suddenly remembered that Lv Muzhi was still in his office!

"Muzi Ah, you have worked hard. Go back and rest first. I have important matters to attend to outside!"

Lv Muzhi stood at attention and saluted to bid farewell to the Principal. He had heard the Principal's muttering to himself. The Brother Jinjiang in his mouth was Zhang Jinjiang, the number one financial magnate of Jiangsu and Zhejiang at that time, and an angel investor of the Qingtian Party.