Beginning of a slow but sure recovery

"Garbage time of history" has somehow become the catch phrase among Chinese A-share investors lately.

Bearing a similar connotation to the metaphor of "chicken ribs "more familiar to most Chinese, indicating the doldrums in the stock market and investors' unwillingness to scatter the stock holdings in a "chop chop" manner, the new buzz phrase was claimed to be attributed to Ludwig von Mises, leader of the Austrian School of Economics.

According to information on the internet, von Mises defines "garbage time of history" as a period of time violating basic economic laws. But individuals cannot make any changes during this period and are doomed for failure.

But this seemingly "gilded" theory, which can somehow make A-share investors feel better when the stock market is indeed sullen, is fake. Wang Wen, executive director of Chongyang Institute for Financial Studies at Renmin University of China, wrote in a column in early July that the phrase is nothing but academic cheating. By going through every book of von Mises, the presence of this phrase is zero, according to Wang.

Maybe we can take it as a white lie invented by some clever investor to give himself some comfort after going through all the downturns so far this year. To make him feel even better, the phrase has become so popular these days that it can be said that this clever jargon inventor is not the only one having a hard time in terms of equity investment.

But for the vast majority of A-share investors, it is a little bit too early to immerse themselves into sorrow and self doubt.

The stock market mirrors the real economy. China has undergone rapid growth for decades, double-digit for many years. Every rational and mature investor should understand that such growth cannot last forever, especially after considering the size of the Chinese economy. We should also get used to a slower but more sustained development speed when not only China, but also the world, has entered a new normal.

Look around. We can see Chinese companies making every effort to explore new opportunities, improve efficiency and fully embrace new technologies.

Patience should be given to the stock market. Investors and regulators are more aware of the very core of the stock market, which is the quality of listed companies. Changes are being made to basic market mechanisms and policies. Let's be fair, when the market is booming, people will somehow believe that everything is perfect. It is only when setbacks occur that people will realize the importance to consolidate the foundation. It is just human nature.

On the other hand, the A share-market is still very young. Look at the United States and Hong Kong, you can see the dark days they had been through all those years. Otherwise, phrases like "black swan" or "grey rhino", which are true market lingo — salute to that, would not have been invented. But the market matures during these difficult times. Investors also come to know that you should not put all your eggs in one basket and, more importantly, develop the ability to select the companies with true investment value.

But "garbage time of history" is not completely fraud. "Garbage time "does exist, and not strange to basketball aficionados, as they know it describes the end of a timed game when the outcome has already been decided.

It is definitely not the end of any trading in the Chinese equity market. On the contrary, it is fair to say that it is just the beginning of a slow but sure recovery. The lessons learned during the so-called "garbage time "will be of much value when "harvest time" comes. Just stay tuned.