A-shares plummet, is it a "bull market" cold snap or the beginning of a bear market?

In the spring of 2024, the A-share market has experienced a "cold snap." The once thriving stock market suddenly took a sharp turn downwards, catching many investors off guard. This sudden and fierce plunge has inevitably raised questions: Is this a normal adjustment within a bull market, or the beginning of a bear market?

Who is to blame for the stock market crash?

When it comes to the reasons for this crash, there are quite a variety. Some argue that it's because the market had risen too sharply in the previous period and needed to "catch its breath"; others believe it's due to large funds fleeing, with retail investors being treated as the "bag holders." However, what's most interesting is that some have even blamed "AI"! They claim that artificial intelligence is manipulating the stock market, which is both amusing and frustrating.

In reality, the fundamental cause of this crash lies within the market itself. In the previous period, A-shares had risen too sharply, and many stocks had entered the "overbought" territory. It's like someone who has eaten too much and needs to digest, right? Moreover, the regulatory authorities have expressed concerns about the overheated market, which undoubtedly played a role in cooling down the market.

The wails of retail investors: Becoming "chives" again?

The most tragic in this crash are the new investors who have just entered the market. They entered with high hopes, only to encounter such a "spectacle." Some new investors exclaim "it's too much of a pit," feeling like they've become "chives" once again.

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Veteran investors are a bit more composed, after all, they are used to the ups and downs. However, they can't help but feel a bit frustrated. An old investor told me: "I was almost back to even, and now I'm back to square one, it's really heartbreaking!"

Nevertheless, there are some "old hands" who are secretly delighted. They believe this is a good opportunity to buy low and are preparing to "bottom fish." But who can guarantee that this "bottom" is truly the bottom?

The attitude of the regulatory authorities: Indifference or covert manipulation?Facing this sharp market downturn, the regulatory authorities seem to have an ambiguous stance. On one hand, they emphasize the importance of maintaining market stability; on the other hand, there appears to be a lack of substantial measures to rescue the market. This leaves many investors puzzled: are the regulators merely observing from the sidelines, or are they secretly manipulating the situation?

Some media reports suggest that the authorities are cooling down the market through "window guidance." However, this notion carries a hint of conspiracy theory. After all, no one knows exactly where this "window" is, or how the "guidance" is being administered.

One thing is certain: the regulators desire a stable and healthy market development, rather than wild fluctuations. Yet, whether their wish will come true remains to be seen.

Where to from here: Bull Market or Bear Market?

The most perplexing question at present is what the future holds for A-shares. Will they continue to decline, or will they bottom out and rebound?

Some "experts" assert with certainty that this is a normal adjustment within a bull market, and that the market will continue to rise afterward. But who can guarantee that their predictions are correct? After all, even "experts" often misjudge the stock market.

Others are concerned that this plunge may herald the arrival of a bear market. They believe that A-shares may have systemic risks and could continue to fall in the future. But is this view too pessimistic?

In truth, the stock market is like an eternal enigma that is impossible to decipher. It may bring joy or sorrow. The only certainty is that it is forever filled with uncertainty.

How should investors respond?

In the face of such a market, what should investors do? Some say to "stick to value investing," but in a market with such wild fluctuations, who can truly calm down and commit to long-term investments?Some people have suggested that one should "cut losses in time," but the question is, how do you know that now is the best time to stop the loss? What if you sell and the market rebounds, wouldn't that be even more frustrating?

To be honest, I think the best approach might be to "neither panic nor be blindly optimistic." After all, the stock market is risky, and investment should be made with caution. What we can do is to allocate assets reasonably according to our actual situation, and not put all our eggs in one basket.

In general, this sharp drop in A-shares has taught us a lesson: the stock market is always full of unknowns. It may make you rich overnight, or it may make you bankrupt. Therefore, whether it is a bull market or a bear market, we must keep a clear mind and not be confused by short-term fluctuations. After all, on the big stage of the stock market, each of us is just a small supporting role.