Some friends often ask what a bull market is?
A bull market is not just about rising prices; it is a process where retail and institutional investors, lacking certainty of returns in the real environment, concentrate their pricing and advance payments on the expected future returns of the industry under the same narrative and consensus.
In this process, the index continues to rise, and the unrealized profits are continually amplified. Meanwhile, the risks do not disappear; they are merely pushed back in the form of higher prices and longer durations. As the price increasingly deviates from the current fundamentals, the risks borne by holders no longer involve volatility but rather systemic risks related to whether future returns can be sustained. In this process, the market expectations that have not been fulfilled in past years will be redeemed in turn. As asset prices continue to rise, the media will amplify the expectation effect through online broadcasts, and whether inside or outside the market, institutions that were initially skeptical will also enter as prices rise, until the risk exposure becomes so large that some leading institutions and newly entering institutions experience a collapse.
Retail and institutional investors who can survive in despair will continually amplify the network effect as the index rises, which is why bull markets often emerge from despair.
