Rural “share genius” with only 3 years of schooling becomes a millionaire through stockmarket
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Most people in the U.S.A. are still feeling the pains of their 401k being cut in half. China is no exception with its stock markets chopped 50% from its highs (though it has outperformed the USA lately).
Below is a translation from ChinaNewsWrap.com of a Chinese report from Sohu.com. After reading it, my thought was: could this be a pre-quel to the 1987 film, “Wall Street“? More seriously, rural kids of China, follow Xie Xianqing’s persistence and hard work and lots of doors will be opened to you!
The Sohu news portal has a headline news story about Xie Xianqing, a peasant from Sichuan province with only 3 years of formal education, who has made and lost several fortunes by playing the Chinese stock market.
“He purchased shares in Zhongjin Gold Corporation(中金黄金) for 66 yuan. He continued purchasing them until they were over 90 yuan in price. He patiently held them until they reached more than 150 yuan (double the purchasing price) before selling them to earn an ample profit. He purchased shares in Dalong Real-estate (大龙地产) at 12 yuan, and sold them for 17 yuan, earning a profit of over 40% in the space of only 7 trading days. He has purchased shares in Dongbei Securities, Yu Development, and other companies. This is the current record of rural ’share genius’ Xie Xianqing (谢贤清). In 1991, Xie Xianqing invested 60,00 yuan in the Shenzhen Stock Exchange, and within the space of a year his assets reached 1 million yuan. By 1993, his assets exceeded 10 million yuan. In the over ten years since then, he has invested in numerous markets, including futures and foreign currency, losing and regaining tens of millions of yuan. In his life he has already made and lost fortunes on several occasions.”
“Xie Xianqing, recalling his start as a share investor, told the reporter that ‘in 1991, bearing a hempen sack of money on my back, I rushed to the Shenzhen Stock Excahnge and said that I wanted to buy some shares.’”
“Prior to this, Xie Xianqing, who has only 3 years of formal schooling, had worked on a farm planting crops, and as a contract worker in an iron mine. He had worked as the boss of a small printing company, and came to learn about shares by subscribing to the ‘Shenzhen Special Zone Report’ (深圳特区报). After this, defying the doubts of those around him, he rushed to Shenzhen to invest in shares. After only a year his assets exceeded 1 million yuan.”
“In 1993, taking the 1 million yuan in assets that he had earned on the Shenzhen stock market, Xie xianqing returned to Chengdu were he began to trade in legal-person shares on the Hongmiaozi over-the-counter market. By the end of that year, his assets exceeded 10 million yuan. ‘When I later reflected upon that period, I realized why I had earned that much money. One reason was because I possess both foresight and courage. The second reason is that I enjoyed good luck.”
“In 1994, China established its domestic futures market, and Xie Xianqing was one of the first to invest. He had fallen out of favour with the god of fortune, however. As a result of trading in steel and rubber futures, he was brought to the brink of total bankruptcy and ruin. ‘I lost over 2 million yuan by trading in Hainan rubber futures, and a further 2 million yuan on steel securities. I lost several hundred million yuan through speculation on government bond futures. Within the space of only one month, I had lost over 8 million yuan on the futures market. Not only did I eventually lose all of my family assets, I also took on over 3 million yuan in debts.”
“By 1997, Xie Xianqing, who had lost all of his family assets, finally realized over a long period of rumination that the most important thing for success in the stockmarket is knowledge. He began a period of intensive study by means of whatever channels were available to him. Xie, with only three years of primary school education, began to study the different types of technical indicators for shares. At the very beginning, he was aware of what even positive and negative closing lines are. He made the arduous effort to memorize all of these technical meanings, and to further study their significance. Xie Xianqing, who is unable to even write many characters correctly, sat in front of the computer every day for over ten hours, studying technical charts for the analysis of shares.”
“At the same time he also travelled to Shenzhen, Beijing, Shanghai, Jinhua and other areas, to ask for instruction from stockmarket experts, ‘I worked hard to acquire meetings with stockmarket experts, and spend I don’t know how much money on travelling fees.’ Once he located these individuals, were they willing to teach him? ‘Xie Xianqing tells the reporter that ‘my greatest advantage is my patience. I would continue to give them phone calls, and very sincerely invite them to drink tea or share a meal. They were eventually all willing to teach me one or two tricks.”
“Xie Xianqing’s limited schooling was a source of surprise for many people. He learnt of a renowned futures expert, but was unable to obtain a meeting with him. Xie then worked for six months in a company opened by a friend of this individual, and finally managed to obtain a meeting with him by these means. ‘We have now become very good friends, and he has taught me a number of things which have brought me considerable benefit.’ At present, Xie Xianqing, who is constantly learning, has on the one hand obtained knowledge from the lesson of his own failures, and on the other hand continuously studies the best techniques of other stockmarket experts. He has also enlisted the help of computer experts to convert his own concepts into software programs.”
“After being involved with the stockmarket and futures market for over 10 years, Xie Xianqing has already become a thorough member of the ‘technical school.’ Xie Xianqing believes that if you want to earn money, you must use large amounts of capital to pursue long-term trends, and small amounts of capital for short-term trades. ‘The market is constantly changing, and investors most learn to constantly change along with it, if they want to be able to obtain an undefeatable position. The shifts on the A share market are quite large, and investors cannot blindly cling to shares, but must engage in short-term trades.”
Title of original news story in Chinese: “农民拜师学炒股资产千万，腰缠万贯也曾倾家荡产”
Sourced from: China News Wrap
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August 25th, 2009 at 3:43 pm
Being a investor myself (3 years full time and part time for years), here are my two cents.
* When the market is good like China today, every one is a genius.
* When the market crashes, many will bankrupt.
* Good investors have been trained and they usually work for mutual funds to handle other people’s money. It is a professional job, and not a job for gamblers.
* The society will be bad at both extremes of the market. Hong Kong is a good example. When every one is busy ‘making money’, they will forget their regular jobs.
Family lives will be affected adversely by the ups and downs of the market.
* Chinese stock market is the wild, wild west. Insider trading is not enforced and financial data is manipulated. It takes years to clean it up.
Forget so-and-so making millions. Their gamble pays off this time, but there is no guarantee next time. If you know someone always beating the market by one or two points, stick with this guy. Avoid the guy doubling his money every year as next time he could lose all.
August 25th, 2009 at 6:25 pm
Taiwan in the 80’s is also a good example. When obasans toting groceries drop in to look at tickers, or taxi drivers are talking about their portfolio, it’s time to get out.
Truth be told, even in US stock market is run like a MLM(“mouse club”). It’s a gamble, and the share genius story hopefully is to be heeded, not emulated.
August 25th, 2009 at 8:35 pm
This is literally a case of a million monkeys at typewriters, and one of them coming up with shakespeare.
Studies have proven time and time again that nobody can outperform the market outside of illegal activities (eg bernie madoff, inside traders) or sheer luck (read nassim taleb). And in fact, the financial markets are like casinos in that the odds favor the house, ie the brokers, brokerages, exchange, corporations, government, money managers, hedgies, etc. at the expense of the individual investor.
Stories like these are dangerous in that they give the false impression to would be investors that they can actually win at this game through their sheer intelligence and perseverance, and I fear very many may lose some or all of their wealth from it.
That being said, if you know how the game works, you could take advantage of these these dupes.
August 25th, 2009 at 9:25 pm
@ Colin: I’ve often wondered why I should let a stranger invest my money when if he’s so sharp, why is he working as an investment broker? If he was such a genius, he’d be spending all his time managing his own money and be too wealthy to bother investing my pitiful stake. 😛
August 26th, 2009 at 1:37 am
Steve, the difference is: investing other people’s money is 100% risk free and 100% profitable while investing own money is 100% risky and not always profitable.
August 26th, 2009 at 2:53 am
1) The investor’s story sounds like BS. Even nowadays, 60,000 RMB is a lot of moolah, most expats have a hard time saving that much over a year, forget about the boss at a small company back in 1991 saving it even over several years. What would he have made? If it was more than 5,000 RMB a month I’d be amazed. How does someone go from working in a mine to managing a printing firm? With no real formal education? Once again, this looks like rubbish. Even the details – like carry around 60,000 RMB in a hemp sack – read like complete fabrications.
2) If he’s telling the truth about his investments, then he was incredibly lucky. I’m pretty sure not everybody who subscribed to the Shenzhen Special Zone Report back in 1991 made it rich.
3) I have to agree with Charlie here. Taiwan was – and to a degree still is – an example of just how over-hyped stockmarket investment can get. My old boss when I first worked in Taiwan would, when no getting thoroughly drunk, spend his time watching the stock market results on the television – he managed to waste a large sum of money through his idiotic investments.
August 26th, 2009 at 5:42 am
Thx, folks, for chiming in.
Colin, #3: “This is literally a case of a million monkeys at typewriters, and one of them coming up with shakespeare.”
That’s a great analogy for day traders. To me, they don’t add any intrinsic economic value to society – aside from if they earn a lot of money, they pay tax to the government.
But, folks, isn’t the stock market supposed to be a great way for companies to raise capital from the public? Isn’t this supposed to be a great way for the public to participate in the growth of their economy more than simply being an employee?
In the long run, I think many of these monkeys are going to be able to type Shakespeare though. Enough monkeys will have to have jumped out the window too, I suppose.
The thing striking for me about this translated story is Xie Xianqing’s qualities. He is very persistent and resourceful and courageous to go after what he wants. Also, having lost everything doesn’t stop him. (Gambling his family’s assets away is irresponsible.)
August 26th, 2009 at 12:58 pm
I’m one of those monkeys. However, I can tell you those folks constantly beating the market is not due to luck but a lot of hard work and training. Contrary to the academic assumption, the stock market is not efficient (i.e. the price of the stock is not automatically calculated with all the attributes about a company).
As a stock picker, I do not care about raising money for a company, but making money for myself or the clients for some. I contribute nothing to the society. Hopefully, I try to make money on better judgment than my opponents (every trade there is a buyer and a seller – also known as a winner and a loser).
There are many get rich stories.
* Friends who made over 1 M profit in 401K up to 4-1, 2000 and lost most after 2000.
* The winner of a stock competition (MSN) happened to be a Chinese and lost big in many trades he recommended.
Many, many more.
Some make good money for a reason.
* Cramer, host to Mad Moeny, must make good money selling books. He also make money by buying before he make his recommendation public.
* Following the insider trade info.
August 26th, 2009 at 2:58 pm
As someone who invests in the Chinese stock market, one thing people should know about China’s stock market is that it’s almost completely fueled by speculation rather than fundamentals. In the old days you would see certain stocks shooting up 40-50% a day easily not based on its earning announcements but completely based on rumors. One of my aunts is a CFO for a mid sized company in China and speaking with her there is no doubt in my mind that insider trading is very rampant, fueling speculation. I myself have been given multiple what I thought were wild stock advices from people which actually come true. It’s extremely tempting then to speculate rather than to actually invest based on good logic. In order to combat this, the Chinese government implemented a policy where stocks would halt if their values are raised above 10% a day. However, without good transparency laws and a good infrastructure to enforce these laws, investing in China is more about who you know than what you know about companies.
Those who already have good amount of capital invest in real estate rather than stocks. The properties which I purchased in Shanghai in 2004 have increased by more than 5 times in value if you take into account of currency differences as well. In fact, the average condo/house price in good areas of Shanghai today is slightly below that of New York City (one of my neighbors recently sold her ~150 sq. meter condo for 6+Million RMB). A friend of mine who makes about 8k RMB per month bought a home in PuDong 6 years ago and the property values there went up alot more. While not everyone made off good with stocks in the last few years, just about everyone who invested in real estate in big cities did. Although I am sure the bubble will burst at some point, if you look at Hong Kong, Tokyo, and Taiwan real estate market you will see that even if they lose 30% of the value they will bounce back in a few years.
August 28th, 2009 at 6:56 am
Hi TonyP4, #8,
Hi hzzz, #9,
Bottom line – if you guys have a child who has started working, would you stop them from investing in stocks or mutual funds?
Btw, good for you, hzzz on your condo in Shanghai. I almost ended up buying one few years ago. My view on China’s real estate is still very bullish, simply because there is not much space and there are tons of people. If you believe in the long run China will achieve standards of living similar to that of the West, then competition for real estate will be even more fierce.
Well, I think its definitely true for villas. For condos, I suppose you can build more upwards and the sky is the limit.
August 28th, 2009 at 12:58 pm
My children all do not want to learn my investment skills (some children adore what their parents do but mine are not). Investing in mutual funds is a must to accumulate (or lose) wealth for most at least via their 401K plans in US.
As in life there is no guarantee, but a educated investor makes educated guesses, protects the wealth with various techniques, researches stocks better than most…