Introduction

The recent A-share market has experienced dramatic fluctuations akin to a roller coaster. Just before the National Day holiday, there was a sharp rise, which was followed shortly after by a significant drop. This plummet has sparked a game of wits between new and experienced investors.

Veteran investors began to redeem their funds to lock in profits as the market warmed up. However, the market soon plummeted, leading to a massive liquidation of funds and a sell-off of stocks, which in turn caused the market to crash. As a result, many new investors suffered losses.

What are the reasons behind this surge and plummet of the A-share market?

Moreover, new investors are now the key force in the market. Where do veteran investors get the funds to redeem their funds from?

Veteran investors redeeming funds.

In the past period, after two years of bear market conditions, the number of investors in the market has dwindled significantly, and market activity has also decreased compared to the bull market conditions of previous years.

However, the mentality of many investors remains cautious, as the previous two years of bear market conditions indeed caused losses for many investors.

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But the recent market conditions have been incredible. The National Day holiday had not yet passed, and the A-share market was already gearing up for the surge after the holiday.

This level of activity is very different from the bull market of a few years ago, and at that time, investors were also very active.However, the reason for such significant market fluctuations has finally been revealed.

It turns out that during the recent period of high market activity, fund redemptions by retail investors were also very active.

Had this capital not been redeemed, it would undoubtedly have been driven by the festive market atmosphere to start operating once the holiday was over.

Fortunately, the redemption of these funds provided supply to the market. Yet, even before the National Day holiday had come to an end, the A-share market seemed to be pulled by an invisible hand, starting a rhythm of sharp rises.

The post-holiday surge in the market is also closely related to this wave of redemptions, as it is inevitable that when stocks rise in the market, some people will start to take profits.

After the National Day holiday, a large amount of capital flowed into the market, and this influx of funds also suppressed the existing outflows.

This would lead to a situation where supply exceeded demand, causing the market to explode in a trend of sharp rises. Unfortunately, this trend did not last long. As this upward trend approached its end, many investors, driven by greed and not fully satisfied, began to chase the rising market.

Once this atmosphere of chasing gains sets in, some people will start to go against the trend and sell stocks. Among a certain group of traders, this atmosphere will dominate the entire market, eventually leading to a sharp downward trend.

Moreover, this selling trend is not led by just one or two investors; the way of selling has reached a scaled level.

Just like in a bear market where "the loss of one's lips means the loss of one's teeth," this bear market mentality still influences investors today.Veteran retail investors have developed a "bear market mentality" in past bear markets, so in a bull market sentiment, they are eager to take profits as soon as possible, leading many of them to start redeeming funds to lock in gains.

Especially when the stock market as a whole is in a bull market, this "bear market mentality" leads to redemption behavior that directly triggers fund liquidation, forcing fund management companies to cash out as soon as possible.

This has led to a lot of stocks being forced to be sold.

As a result, the current situation has dropped from around 3600 points to around 3000 points.

Moreover, this sharp decline has accelerated the current bear market, but the stock market fluctuations directly affect retail investors.

Now many retail investors have started investing, involving a wide range of fields, and gradually becoming the "main force" of the market.

There was also a large part of retail investors who did not encounter the impact of the bear market before, and many investors saw such a situation in the stock market, thinking it was a good signal, and then they would swarm in, causing the stock market to decline further.

Emotion triggers stock market fluctuations.

So here it also triggered a lot of emotional fluctuations among shareholders, in the eyes of many shareholders: the redemption behavior of veteran retail investors directly led to their unexpected losses, and also triggered the behavior of the market's sharp decline, in this case, veteran retail investors are also called "sinners".

In this market crash, not only did new shareholders encounter unexpected losses, but many veteran retail investors also suffered losses.It must be made clear that being a fund investor and a stock investor are not mutually exclusive; an individual can be both a fund investor and a stock investor at the same time. Moreover, in the stock market, stock investors are not limited to these two categories. It is not only seasoned fund investors who possess a "bear market mentality"; new stock investors can also have it.

These new stock investors do not trade in the market with their actual funds; the capital they use is often borrowed. The stock market experiences ups and downs, and investing is always a race against time, especially for retail investors who have limited capital. The time they have to invest becomes even more precious. Therefore, it is not uncommon to see investors blindly chasing rising prices and selling off when prices fall.

Retail investors often fall under the influence of market fluctuations and make some blind investment decisions. Such behavior can only lead to being eliminated by the market. If one does not make judgments blindly amidst market volatility, there is a significant chance of making a profit in the stock market. Blindly chasing rising prices and selling off when prices fall also leads to investors becoming restless and lacking patience.

The behavior of blindly chasing rising prices and selling off when prices fall not only has a significant impact on the market but also greatly affects the investors themselves. Investors entering the market also need to conduct a certain level of market analysis. They should not follow the crowd blindly but should be able to maintain a stable mindset and keep a rational mind when facing sharp market fluctuations.Otherwise, facing the fluctuations in the A-share market this time, many stock investors would definitely feel bewildered and even think that veteran fund investors should bear the responsibility for this crash, leading to a lot of discussions on various forums.

However, stock investors who truly think about problems will find that the real "culprit" is actually themselves.

Respect the market and operate rationally.

In today's society, although most people believe that they can pursue the truth through multi-dimensional means, it is actually better to act in accordance with the rules.

They have not thought deeply about how the redemption behavior of veteran fund investors is influenced.

If there were no redemptions from veteran fund investors at all, the market would still have a certain level of liquidity, just like a river. If no one disturbs it, then the river would not fluctuate like it does now.

So many stock investors also need to learn to maintain their emotions and not blindly chase rises and kill falls when facing market fluctuations. The market will not change its relentless trend.

For retail investors themselves, they should also treat the stock market rationally, have a heart of awe, and have a deep understanding of every transaction, never blindly follow the trend.

They need to know how to analyze the current market conditions and the market sentiment in order to better cope with market fluctuations.

At the same time, they should also have a certain understanding of market fluctuations, have a certain sense of reflection, summarize experience in the existing market state, and only then can they better cope with future market fluctuations.Conclusion

There are numerous reasons for stock market fluctuations, with the primary cause being the movement of capital. However, market volatility is not solely due to capital flows; it is influenced by a multitude of factors that affect the state of market fluctuations. Therefore, market changes are complex.

To truly understand the market, one must continuously engage in learning and summarization.

During the learning process, we should also continuously explore the essence of problems to gain a deeper understanding and maintain clarity in our minds.

In the future market, we should also strengthen our self-cultivation, maintain a rational mindset, and stabilize our emotions when encountering market fluctuations. By accumulating experience, we can better adapt to market changes and make better decisions.