4 January 2016: China's new circuit breaker trips on day one
China debuted a market circuit breaker meant to calm its volatile stock market. On its very first day the CSI 300 index fell 7%, triggering a full halt of trading. Rather than reassuring anyone, the rule encouraged traders to sell early before the doors shut. After another halt a few days later, regulators scrapped the mechanism entirely within the first week. A fire exit, it turns out, can cause a stampede.
The lesson: Rules designed to stop panic can create it when everyone rushes to act before the gate closes.
What it meant for investors
$1,000 in Shanghai Composite at the start of 2018 → $1,182 today, vs $2,519 in the S&P 500.
We start the clock at the start of 2018, the first year in our price data after the event. That is 1.2 times the money, but $1,337 less than a plain index fund made over the same years.
What Shanghai Composite teaches: Rapid economic growth does not guarantee stock market returns, because dilution, governance and the price paid decide what shareholders actually receive.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2015 | $3,300 | $1,182 | $3,301 |
| 2018 | $3,300 | $1,182 | $2,519 |
| 2020 | $3,050 | $1,279 | $2,092 |
green = beat the S&P 500 · red = lost money
What if you bought Shanghai Composite? Every starting year and the full story →
More Shanghai Composite history
- 23 January 2020: China locks down Wuhan
- 27 February 2007: Shanghai sneezes and the world catches cold
- 12 June 2015: China's stock bubble peaks
- 11 August 2015: China devalues the yuan
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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