Last time we discussed the "valuation kill" trick in stock market investing, and today we'll continue with the second move—"logic kill."

Simply put, this refers to the situation where an investor's favored story or logic suddenly gets slapped in the face. At first glance, it might seem similar to "valuation kill," but in reality, they are very different.

What happens when valuation is killed? The price drops, but as long as the story remains intact, it might rebound eventually. But "logic kill" is different—it’s like the foundation of a house collapsing; the surface bricks and tiles haven't fallen yet, but who would dare to live there? No one. This kind of damage is permanent, and investor confidence is completely shattered.

Think about it—some investors are optimistic about a company's growth prospects or the future of a certain industry, like LeEco back in the day, or Enron in American history. These companies had a shining halo, and their logic sounded impeccable. The problem is, whether emerging things can survive is uncertain at the time. Most new things are just fleeting, or else the world would be full of new industries by now.

But once the logic behind an investment is proven wrong, or starts to waver, the market will immediately sell off. These companies usually have high valuations to begin with, and once the logic collapses, both valuation and expectations crash together. You could say "valuation kill" is a price decline, but "logic kill" is the death of cognition.

The reasons triggering this "logic kill" are mainly a few. First is policy crackdowns…