617. Manipulate stock market in China (12/21/09)
In July 1994, trying to get rid of the persecution of the Feds, I went to China.
As I had no work to do, I thought I might find a fortune in stock market. The Shanghai security index was about three hundred something at that time. There was not much space for investors to lose at that level.
I studied the stocks and chose one - a manufacturer whose product was cement. That manufacturer was generous in dividends while most other Chinese companies didn't give a cent to their shareholders. It also had a bright future - the factory located in SiChuan province, not far away from Three Gorges where the biggest hadro-power station was going to be built. The demand of cement would be huge.
Several days later the security index went to five hundred, but my selected stock didn't catch the index. So I bought two others. When the index jumped on to 700 level, my selection still wouldn't go with the rising market, I started to suspect that I was targeted. The stock market in China in early 90s was a new born baby. It was very primitive. The price of all stocks went up and down with the stock index. My stock selection became exceptional in a rising market. I also knew I was under surveillance.(see "15. EM sleep wave in China (4)") When my acquaintance met me to discredit my stock selection, when my friend called me to tell me the "inside news" that stock market would collapse, I view it from an oppiste angle. One morning when I entered the hall of the security company, I found the electronic display board blackened. Staff said the business would shut down that day because the power supply problem. I thought in other way. I thought it was a subotage targeted at me. There might be a good day tomorrow.
I immediately opened an account in another security company and bought three different stocks there. Really, next day was a big day - index jumped to 900 level approaching to 1000. Although as usual, my selection didn't make money, I was happy. I successfully foresaw a soaring market - from a sabotage done by secret police.
I changed tactic. I bought stock in small trading - about 2,000 yuen each time(which equals to $250). With $5,000 capital, I could have 20 tradings. It covered the all category of the stock market, from industry to utility. In 1994, there were only 150 company in stock market.
The stock market went down to 500 level. I lost several hundred dollars but my feeling was good. It looked like that I controlled the stock market passively with $5,000. It was unbelievable! I told other people that I was targeted. Nobody believed it. I said the market would soar if I left. People just laughed. People couldn't feel what I had experienced. I had watched the price curve of a stock rising slowly for hours. Then stop at a point and turned downwards. That point was always the time When I finished a buying order on it. It happened many times. So accurate that I believe my account number was registered in a special formula. The Chinese security was trading in a computerized system.
In May, 1995 my application to extend the Visa was rejected. The police behind the counter advised me in a low voice,"Go home, go home." I bought an air ticket leaving on 5/18.
On 5/17, I sold the stock. It was an extrodinary slow day that day. The price of stock was frozen in the trading board. Next morning, I went to the security company to collect money.(The leaving flight was in the evening) The hall was like a boiling pot. I still remembered the red figure of 27% illustrated the increase of security index. It was a brilliant day for stock market. it also was a brilliant day for me. I had predict the soaring up of market. I didn't expect it came so swift. The speculators that manipulated the market had their capital locked up in stock too long time. (Many speculators in China were state running company. The speculating capital were from company's normal business fund) Once the secret police opened the green light for an upwards market, they couldn't help to free their fund from a locked box.
I really got good lessons though I lost money in Chinese stock market.
1. The stock market is controlled by the governnment.
2. The financial group has to obey to the secret police.
3. Chinese secret police collaborated with the Feds.
4. I was targeted by the Feds. They would sacrifice the interest of other group, however big it is, to suppress a targeted individual, however small he is.
618. South East Asia financial crisis (12/26/09)
In May 1995, I came back to US. The stock market was at an unreasonable level with high P/E value. I view it as a trap for me. Of course, I would not touch it.
In later 1997, media said the international speculators attacked Hong Kong dollar. The Hong Kong government managed to go over the crisis so the speculator turned on to South East Asia. Within months, the currency of Thailand, Indonesia, South Korea, all depreciated significantly. That was the famous South East Asia financial crisis. With the success in other countries, the speculator came back to Hong Kong in 1998. This time they aimed at stock market. They bought a large amount of future contract to bid there was a low HanShen index(Hong Kong’s security index) for the August. To achieve their victory, the speculator had to sell down the security market. Hong Kong government, on the contrary, came out to save the stock market. It activated its big foreign currency reserve to take over the stocks poured out by the speculator. Finally the Hong Kong stock market successfully stood above 8,000 index.
A hedge fund company named "Long Term Capital Management" (L.T.C.M.) lost huge in that fight. News reported the Federal Reserve had called an emergence meeting, forcing big financial firms such like Citi group, Goldman Sach... to lend money to save L.T.C.M.. A Hedge fund company could manipulate other big financial firms, it must be more powerful than the Federal Reserve. Obviously it was a cover company of the Feds.
What caught my eye was a news which said that in order to sell down the security market, the speculator borrowed a large amount of stocks from celebrities and rich families of Hong Kong. Now those borrowed chips were all taken over by the Hong Kong government whom said it would keep those blue chips in hand as reserve and wouldn't sell it any more. Since what government bought in this battle occupies 11% of the total blue chip, a large amount of stock were locked up in safe box.
Then how would the speculator to compensate the lenders? They had to buy the same stock from the market. According to the principle of supply and demand, the buying action will push up the stock price. Since Hong Kong stock market always follows New York stock market, I concluded there would be a prosperous bull market.
I had the experience that secret police would suppress the whole market (in China) to restrict me to make money from stock. They didn't care other group's interest, but what if it was their own interest? It worth a try.
I bought 100 shares of Boeing on 9/23, and bought 100 shares of Travelers on 9/25. I chose Boeing because it was one of the only two big commercial plane manufacturers in the world. Feds wouldn't shut down a big company just for my 100 shares? As for "Travelers", it was a new Dow Jones 30 share. I don't think financial group would introduce a junk stock in Dow Jones 30. They would make money on it when people were still strange to it. Several days later, "Travelers" merged with "city Bank". So I then had 100 shares of Citi.
The response of the Feds was severe. I suffered heavy E.M. wave attack that I couldn't stay at my home. At last I had to go San Francisco to live with my parents. On 1/15 I encountered with a bank robbery on my way to my parents' house. I think it was a trap Feds prepared for me - a "random shooting death" case. The case was disrupted by a bystander. (see 402,404,561,562 "San Francisco bank robbery")
In mid March 1999, my parents and my wife told me they would leave for trip within a week. My parents would go China. My wife would go Hong Kong with my daughter and her father. So I would be left alone in the house, either in San Francisco or in San Jose. I thought the Feds could wait any time longer to boost the stock market. They prepared another murder case for me. Before my relatives' leaving, I bought an air ticket and went to Hong Kong on 3/19.
As I expected, the Hong Kong stock market went bull followed the leadership of New York stock market after I arrived in Hong Kong. Seeing a boiling market, seeing other stocks were rushing towards their historical high, I bought another 100 Boeing shares at the price $41 on 4/15. Boeing's historical high was $60, there was $19 space for its price to grow. When Boeing stock turned its head to downwards, I realized I made a mistake. I remembered the experience in China: a rising price curve suddenly stopped and turn downwards. The turning point was always when my purchase order finished. On 4/21, I sold my stock. I made $3100 dollars at Citi Bank. I lost $230 on that newly bought "Boeing". I knew if I held on it, they could drive the price to $34. I made $650 on the Boeing I originally bought on 9/23/1998 later.
In Hong Kong, I had a hard time to make a trading. The phone in my rented room was harassed. To carry out a trading, one day I had to go out in mid-night, to buy a phone card in a Seven-Eleven store and called the securities company to fulfill a deal by public telephone.
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