The turnover rate of A-shares is far ahead globally, appearing to have ample liquidity, but in reality, there are significant issues. High turnover directly pushes up market valuations, leading to fewer opportunities for undervaluation, which also disappear quickly. This creates a strange phenomenon — a painfully short bull market and a long, torturous bear market.

Why are retail investors so active? To a large extent, they enjoy hearing stories. Looking at trading volume rankings, small companies with market caps below 30 billion account for seventy percent, but contribute only ten percent to profits. This is a typical herd-following phenomenon. Retail investors focus on capital flows, financing news, and short-term stimuli, and are not really concerned with corporate governance or fundamentals.

The evolution of the US stock market is quite interesting. 75 years ago, individual investors accounted for as much as 80%, but now it has fallen to less than 20%. Our A-shares have only developed for 35 years, and this process will certainly happen gradually. As the weight of institutional investors increases, the market will become more rational, and the valuation system will become healthier.