In the past two years, the most miserable in the A-share market have been those who engage in value investing.

The reason for this situation is that the value investing they trust is collapsing.

Basically, every day is like a stage play of slaughtering big white horses.

Whether it is individual investors or institutional investors, they have started to doubt the value of this part of the investment.

I want to buy your stock and grow with you, but you want to sell the company and cash out quickly.

I am buying stocks, and you are selling the company, which is a typical case of going in opposite directions, resulting in a lack of trust.

The benchmark of value investing is Moutai, with a current P/E ratio of about 28 times, which has fallen by more than 60% compared to the highest of more than 70 times.

BYD is 18 times, and CATL is 15 times. These stocks that were not considered expensive at a hundred times have fallen to the teens, but now no one dares to buy.

Is it because their performance has obvious problems? No.

Is it because their stock prices still have a lot of room to fall? Also no.Why then is no one buying? Because the market lacks confidence; this is a crisis of trust.

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When those who practice value investing start to read books on technical analysis.

When they choose to cut their losses on the stocks they hold and massively withdraw their investments, the market naturally cannot rise.

The rise in stock prices is due to the trust of capital, forming a joint force.

If there is disagreement at high levels, it is because there are always people worried that the bubble will burst.

Then disagreement at lower levels is due to the collapse of faith, with no direction at all.

It's not just that value investors no longer believe in value, but all investors no longer trust the market.

The ones who withdraw the most from this market are definitely not retail investors, but institutional funds.

They believe that this market is beyond saving, so they all close their positions or cut their losses and no longer want to stay in the market.

Because they find that no matter how they play, they can't make money, and the end of the game is a huge loss.Foreign capital is like this, and so is domestic capital.

Capital does not lie; they do not accept a superficial peace, they will vote with their feet and make their choices.

It is clear that capital has a significant trust crisis in the current market, not just small retail investors.

After all, whether small retail investors believe it or not, they cannot determine the direction of the market, and this trust has no value.

A single medium-long candle can change three views, and people on the internet are shouting that the bull market is back, hurry back!

If the index opens five consecutive medium-long candles and rises rapidly by 200 points, small retail investors will immediately believe that the market opportunities and trends have come, and they will sell everything they have to enter the market.

It is very easy to deal with retail investors, but it is really very difficult to deal with capital.

Capital can see real data, external opinions, and predictions for the future of the investment market, which are relatively more realistic.

They do not have a hard time speaking out, but after weighing the known conditions and predicting the results, they chose to wait and see.

Someone asked, where is the problem?The issue lies in the imperfection of the A-share system, which leads to many listed companies and capital not playing by the rules, scaring away funds that were originally eager to try.

Let's go back to that phrase: others are thinking of investing, but you are thinking of selling the company.

When investors begin to suspect that the purpose of a company's listing is to cash out, not to further develop, trust collapses, and everything has to be rebuilt from scratch.

We deeply consider several points and look at this issue fundamentally.

Why are companies rushing to go public?

The reason companies are rushing to go public is not to expand the business, but to survive.

Cashing out is one aspect, on the other hand, these companies are facing a survival crisis, and many are coerced by capital.

Due to accelerated incubation, they have chosen to collude with capital.

And the goal of capital is to make money and exit, going public is definitely the main route.Thus, these companies, whether good or bad, must go public and must undergo the baptism of capital.

Many times, capital is like pulling up the seedlings to help them grow, but there is no other way, the current small and medium-sized enterprises are very difficult, if they do not go public, there may be a problem with survival.

Especially for some technology-oriented enterprises, the cost of research and development is very high, and they are light assets, so the financing channels are only these.

The financing from going public is all in the nine or ten digits, which can at least ensure that a listed company will not have to worry about food and clothing for several years, and survival is not a problem.

Why should these companies go public?

Many companies come to make money, why should these companies go public, why can't the IPO stop.

In fact, there are two reasons.

On the one hand, these companies have to survive.

These companies may not be as good as everyone thinks, but these 5,000 companies, compared to the tens of thousands of small and medium-sized enterprises, are at least the top companies.

If these top companies can't survive, then what about those enterprises that don't have financing?So, for this part of the company to thrive, they must be given ample opportunities to do so.

On the other hand, not all listed companies are just about raising funds; there are still quality listed companies, albeit in a relatively low proportion.

If we don't let them list and compete, who will know which company will be the outstanding one in the future?

Therefore, the Initial Public Offering (IPO) must not be halted, as the impact on the real economy would be too great if it were.

Currently, investors lack confidence and trust, which in turn leads to a lack of confidence among business owners, and no one will start a business.

What should the stock market give back to investors?

The stock market should give back to investors the growth of listed companies, which leads to an increase in stock prices.

As well as the dividends from the profits of listed companies.

Why does this kind of feedback seem so scarce in the A-share market? There are many reasons.

Some listed companies have never thought about giving back, which is a large part of the problem.Some other listed companies lack the capability to provide returns, becoming very lethargic after going public, and living in a state of confusion and stupor.

There are also some that are quickly eliminated by the times, reaching their peak upon listing, where there is no room for returns.

Those companies that ultimately emerge and truly grow up have indeed provided returns to investors.

However, most investors prefer to trade in the short term and cannot enjoy this kind of dividend.

In addition, the survival environment in recent years has become less suitable for small and medium-sized enterprises, so fewer and fewer listed companies can grow up in the new batch of IPOs.

How to balance the huge blood extraction and transfusion, and where does the positive cycle come from?

This is also a problem that needs to be solved.

You will find a phenomenon, that is, most high dividend companies actually do not distribute money to shareholders and the market, but to the major shareholders, and state-owned major shareholders are more common.

This indicates that many dividends ultimately do not return to the market.

The blood extraction of IPOs and the feedback from the market are not equivalent at all, and the positive cycle is still missing.When the market's investments yield no returns, it begins to enter a negative cycle of bloodletting, and the problem becomes very serious.

Listed companies also realize that the feedback they provide to the market has no value. Major shareholders find that the stock price does not rise, and they will think about taking advantage of speculation to cash out and leave quickly.

Instead of seriously managing the company, they try to piggyback on hot topics to boost their stock prices.

The essence of a positive cycle is that the listed companies are doing better and better, providing more and more feedback to the market, attracting more people to buy stocks, and the stock price should continue to rise.

What is the fundamental solution to the trust issue?

In fact, this problem is not difficult to solve, and the overseas market has already solved it.

It's just one word, penalty.

The lack of a penalty system is the core of the problem.

The cost of making mistakes is too low, and the temptation of benefits is too great.

The cash-out after going public is at least in the hundreds of millions, you say which boss of a business is not tempted.Making a profit of only ten to twenty million a year, one has to work hard and struggle for decades to earn so much money, while the capital market is easily accessible.

There are too many bosses who hold the mentality of going public in three years and then enjoying the fruits of their labor, leading many to take risks.

It's not just the attitude towards going public, but more often, they choose to do whatever it takes, violating the bottom line.

If the problem can be solved by penalties, making them dare not act recklessly again, it may be possible to fundamentally solve the trust issue.

Only when the market restores trust can large funds dare to accelerate the pace of entering the market, and the overall market will change.

In a word, trust is the foundation of investment.