Chapter 5 - Take profits and exit

In the blink of an eye, the stock price soared to 124.58 yuan and sealed the limit-up board. Buy orders surged instantly, with 1.25 million shares queuing up to buy in a flash. The number was reassuring. "Brother Liang, you're amazing! I was too short-sighted." Zhao Haisheng gaped in shock and couldn't help but give him a thumbs-up. If nothing went wrong, the funds in the margin account they'd provided Lu Liang had now skyrocketed to 830,000 yuan. "Come on, it's just down to good luck." Lu Liang patted Zhao Haisheng on the shoulder. "I'll take off now—won't bother you with work." Over the next four trading days, Baofeng Technology fully cemented its reputation as the "Demon God Stock". Though there were no more spectacular one-word limit-ups, it still surged by 7 to 10 percentage points every single day. In the blink of an eye, another new week rolled around, and Baofeng Technology's share price hit 224.4 yuan per share. "The market must be changing hands at a high level right now!" Lu Liang sipped his coffee, recording the situation and observing market trends every day to gain experience. Because in three more days, with just two more limit-ups, it would achieve the record of 37 limit-ups in 40 days. The target peak price of 327 yuan was drawing closer and closer. On this day, Baofeng Technology pulled another stunt and staged a sky-to-floor board. It soared 10% intraday to seal the limit-up board, but suddenly broke the board half an hour later, then plummeted to seal the limit-down board and stayed there until market close. The entire market was flooded with bearish chatter—from paid trolls and retail investors who'd been led astray alike. On relevant platforms like Tieba, Hupu, and Weibo, posts cropped up one after another yelling:"The Demon King has fallen!""The market makers are playing tricks!" A smile tugged at Lu Liang's lips, unaffected by the rumors. Because based on the information he already had, the next two days would definitely bring two more limit-ups. From this, he could infer that today's sky-to-floor board was a bearish ploy to accumulate shares, paving the way for a final rally to lure retail investors into taking the bait. According to his research, as many as 38 institutional investors had entered Baofeng Technology during this period—and the actual number was even higher. For institutions to lock in profits and exit successfully, they needed to attract a flood of retail investors to take over their positions. Blindly driving up the stock price would only make retail investors more fearful, not reckless. Only the thrill of something lost and then regained could truly stir people's greed. The final 30% price surge was nothing more than the last meal served to them before the trap snapped shut. Those who realized this would escape with their money; those who didn't would be left holding the bag. "Time to switch to a new book." After finishing Fundamentals of Financial Markets and Institutions, Lu Liang didn't delve deeper into financial market knowledge. What was the point of mastering textbook theories? The market was ultimately a tool wielded by people—it was better to study the source directly. As expected, the two limit-ups arrived right on schedule over the next two days. The stock price rocketed to 274.52 yuan, leaving just a 19% gain to reach the peak of 327 yuan. Thursday, May 21st—Baofeng Technology would mark its second full month since listing in three days. Market sentiment was extremely volatile this day. By 10:30 a.m., an hour after the market opened, the turnover rate hit 52%, and trading volume exceeded 3 billion yuan. The price trend was bizarre, swinging up 5 or 6 percentage points one moment and down 4 or 5 the next, completely unpredictable. But after the sky-to-floor board stunt followed by two consecutive limit-ups, retail investors' confidence had already been boosted to new heights. Besides, Baofeng Technology was a leading enterprise riding the Internet Plus wave, and its current market value had just breached 40 billion yuan. Experts from all walks of life were clamoring that this was China's answer to YouTube, and a trillion-yuan market value and 1,000-yuan share price were not just dreams. What's more, the A-share index had broken through the 4,500-point mark—with such a booming market, it was practically screaming "buy blindly with your eyes closed". Retail investors were utterly fooled, losing all ability to think independently and becoming nothing more than sheep in the herd. "If I didn't know what was going to happen next, would I be just like them?" Lu Liang pondered the question seriously, his expression growing grim. The answer was most likely yes. When you're trapped inside the game, you don't even realize you're a player. Human greed is endless—once you get a taste of profit, you always want more. With that thought in mind, Lu Liang decided not to push his luck. When the price hovered around 310 yuan, he began selling off his 34,000 shares in small batches. After liquidating his entire personal account, he logged into the margin account provided by the brokerage and sold all 6,600 shares in one single order. In the face of such a frenzied market, selling 40,600 shares was like throwing a pebble into the ocean—not even a ripple was stirred. "Personal account: 10.54 million yuan. Margin account: 2.046 million yuan.""Margin account principal plus interest to be deducted: 520,000 yuan.""Total balance including principal: 12.066 million yuan." Lu Liang was in a daze. Two months ago, after selling his house, he'd only had around 100,000 yuan in liquid funds. Even if he'd maxed out all his lines of credit, he wouldn't have had more than 600,000 yuan. Now, he was a multi-millionaire. Taking a deep breath to steady his racing heart, Lu Liang dialed Zhao Haisheng's number. "Haisheng, help me settle the margin account." Zhao Haisheng was stunned. He quickly pulled up the monitoring system and saw that Lu Liang had liquidated all his positions. He couldn't help but remind him, "Brother Liang, even if the account hasn't been open for a full month, we still have to charge a 10% fee." "It's fine. 520,000 yuan including principal and interest, right? Just deduct it directly." Lu Liang replied calmly. "Alright, Brother Liang. If you're free this afternoon, could you come to the branch office to sign the settlement agreement?" At 2 p.m., Lu Liang returned to Guotai Securities. The hall was still packed with people, and a steady stream of new investors was signing up for accounts. At 10 a.m. that morning, the broader market had broken through the 4,500-point mark, sparking a nationwide stock market frenzy. Elderly investors were even exclaiming that it felt like a throwback to the bull market of 1992. Stock trading had become the hottest trend in town. Lu Liang was ushered into the VIP lounge. Looking down at the frenzied crowd of investors below, a strange glint flickered in his eyes. He'd been trying to see things from the market makers' perspective lately—and what he saw before him was a lush field of leeks ready to be harvested. Lu Liang thought to himself that the market must be nearing its peak. Finance was never the pillar industry of the country—real estate was. Zhao Haisheng was printing out the contract when he asked with a smile, "Brother Liang, did you get some inside information or something?" "Where would I get any inside info?" Lu Liang laughed it off. "It's just that the market's way too hyped up right now. I'm afraid of getting swept up in the frenzy." "You're right—it's high time for a cool-down." Zhao Haisheng was polite enough not to press further. He couldn't help but glance at the stock ticker on the wall—Baofeng Technology was up 7.55% for the day and was about to seal another limit-up board. A smile tugged at the corners of Zhao Haisheng's mouth. As a seasoned industry insider, how could he possibly miss out on a market like this? Lu Liang was just being too cautious. With the market performing so well, on the verge of breaking 5,000 points, it was almost impossible for individual stocks to fall. But then again, Lu Liang had already made a killing—cashing out now to lock in profits was perfectly reasonable. "Damn it, I sold too early!" Lu Liang followed his gaze and put on a look of frustration. Zhao Haisheng patted his shoulder in consolation. "It's okay, Brother Liang. Better to sell early and lock in profits than to risk losing everything later." Lu Liang sighed. "But who ever gets tired of making more money?" Zhao Haisheng smiled without a word and handed him the settlement agreement. "Check it over—the balance is 1.536 million yuan." After confirming everything was correct, Lu Liang signed his name. "Brother Liang, the funds will be transferred to your account within two hours. Please be sure to check." Zhao Haisheng said, then added, "We've just launched a new hybrid fund. It's already up 25% in the past month—would you be interested in learning more about it?" Zhao Haisheng didn't know exactly how much Lu Liang had made from those 68 IPO lots, but he estimated it was no less than 6 million yuan. That meant Lu Liang now had at least 7.5 million yuan in liquid funds. If he could persuade Lu Liang to invest just 1 million yuan in the fund, Zhao Haisheng would earn a 15,000-yuan commission. "I think I'll take a break for a while." Lu Liang smiled and brushed him off. "I've been staring at the stock charts every day lately. My heart's been pounding nonstop, and I can't even sleep well at night." As far as Lu Liang was concerned, so-called funds could never outperform stocks in a bull market, but they always fell harder in a bear market. What's more, most funds didn't actually make money through smart investments. Their real profit model relied on constant trading to generate commission fees, ensuring they made money rain or shine. As for their clients? A simple "investment involves risks" was enough to brush off any complaints. If clients did make money, it was purely thanks to a booming market—had nothing to do with the fund managers' skills at all.