Value of the investment strategy in China discuss the applicability of the securities market

Abstract This article first discusses the meaning of value Investment, value Investment strategy combing the development of the theory, then the value of the Investment strategy of the applicability of the securities market in China to explore, demonstrate its applicability in the Chinese stock market lower and further analyze the reasons, and finally, How to create value for the Investment strategy in China's stock market environment of the applicability of a number of policy recommendations.

Keywords applicability of China's stock market value investing

First, the value of the Investment in content and theoretical development
(A) the meaning of value investing
Value of the Investment, its core idea is: on the economic factors affecting Investments in securities, industry prospects, the listed company's operating results, financial condition and other factors based on the analysis, using a method of measuring a stock's "intrinsic value", then with the stock market value comparison, so that investors make is investing in the stock Investment strategy. Value of the Investment that the intrinsic value of listed companies and stock prices will be deviated from, the intrinsic value of stock prices around the stable point fluctuations, and the stock price seems to have long-term trend of inward in the return value; its intrinsic value determined by management and other basic side factors, the stock price is determined by market supply and demand of funds in different determinants, the intrinsic value is higher than the stock price spread is called "margin of safety", that is, when the stock price higher or lower than the intrinsic value of the stock undervalued or overvalued, there have been Investment opportunities.

(B) the development of the theory of value investing
The earliest theory of value investing research scholar of Marx, in his view, stock prices will return with them for the size and reliability of the change, while the stock price determined by the expected income, it is also a speculative nature in Marx's research base Western scholars have made some further research. well-known American investor Benjamin Graham, in 1934 published "Security Analysis>> a book, the title of the basic analysis of the" Bible, "he says, in the long run , the stock price depends on the development of enterprises and enterprises to create profits, and be consistent with, and short-term price is subject to various factors and fluctuations, even though the financial asset price volatility is large, but based on the value of stable and measurable .1961 year, Modi Geli Ni and Miller proposed a dividend distribution policy has nothing to do with the value of the company's MM theory The theory that the strict assumptions, dividend policy and the value of the business will not have any impact on stock prices, a the company's stock price is completely determined by its investment decisions determine the profitability of the. MM theoretical framework of modern valuation source of ideas, it is the promotion of modern valuation theories to flourish. On this basis, a large number of people passing through research and demonstration, the final decision to establish the price of a basic variable - free cash flow and free cash flow discount model thus proposed.

Second, the value of the investment strategy in China to explore the applicability of the securities market
(A) the value of the investment strategy in the Chinese securities market, the applicability of
According to the theory of value investing, the stock price fluctuates around its value, its intrinsic value but also depends on the fundamentals of business management and other factors, so theoretically, the stock price and net asset per share, excluding non-normal share of net profit after earnings, operating cash flow per share and other variables have some correlation, but the Chinese securities market, practically speaking, is not the case, a serious deviation from the intrinsic value of the stock price, we use the relevant valuation theories appropriate valuation of enterprises often inconsistent with the facts.

From a stock market point of view, a lot of good fundamentals, the potential value of a good stock but had been greatly underestimated, and the price all the way down, the most typical on a number of banking stocks. By June 20 closing price, this year quarterly estimates, the 14 listed banks in 2010 an average of 9.71 times the dynamic price-earnings ratio, which is less than 10 times nine, the smallest is the Bank, only 7.48 times; and greater than 11 only three times: Ningbo Bank of 14.17 times, 12.56 times the CITIC Bank, Merchants Bank 11.74 times. In terms of book value basis, all less than 3 times the average of 2.03 times, of which there are between 2-3 times in six at 1-2 times the There are between eight from the valuation point of view, really very low. the current nine times, 10 times the PE level, even in the Hong Kong stock market, but also in the bottom of the area, because in the history of Hong Kong stocks, broader market valuation is basically fluctuated between 10 and 20 times PE ①. On the contrary, many of the fundamentals GEM companies are not very kind of climbing higher and higher, so in my opinion, the value of the investment strategy in the Chinese securities market applicability, or have some limitations.

(B) Analysis
1 Strong negative value of the investment cycle of the industry
China's economy is still in the stage of rapid industrialization, GDP of the troika for investment, consumption and export, investment and exports which are the basis of industrial demand, a large number of fixed asset investment to promote the formation of the basis of industrial demand. Mapped to the A-share composition of the market value of listed companies, "coal, electricity, steel and concrete, real estate colored" and other strong cyclical industry-dominated, and the U.S. market to finance, IT, pharmaceuticals, consumer lot as the main structural differences, we know that Buffett used to invest in consumer, media and other weak financial and cyclical companies, and in the China A share market, consumer retail industry is still in its infancy, it is worth very little long-term business investment strong; major media organizations are still subject to ideological control of non-economic organizations; financial sector is worth nearly two years before some strong long-term investment business.

2 non-market factors distort the value of investment
Natural capital market is a commercial market, it is the economic interests of the merits of the standard measure of all the Chinese stock market is, the enterprise is not the case, first, a large number of local state-owned enterprises controlled by local governments, eyesight range of mergers and acquisitions, asset injection, free asset allocation, major shareholders and related party transactions accounted for money, all kinds of behavior and the market economy is far from rational economic behavior, so be difficult to rationally analyze the real investment value. Second, the private economic interests as it touches to carry out business activities, but a considerable part of the operating performance of private enterprises, they are not determined by the management level, but on a variety of difficult to measure the "relationship between the resources", all kinds of real estate, mining companies in particular.

3 is stronger than the gray value of investment operations
Value investors to share the growth of income-based corporate performance, investment performance is more fixed, generally 20% to 30%, and the chance is good to reach 50% to 60%, but some of the so-called investment experts, through the operation of some themes, concepts and stocks, the retail establishment on the basis of sheep in the fraud rate of return, much higher than the value of the investment rate of return, of course, not all non-value retail investors are sheep in the fraud, but fraud in the value of the investment and between profits, there are many gray middle ground, industry wheeled, band operation, with the village PLAY, insider information, the yield is much higher than the value of investments, so many people under the premise of risk control, tend to choose higher return on capital investment strategy. Links to free download http://www.hi138.com Third, create a value investment strategy in the Chinese securities market applicability of environmental
(A) strengthen the Chinese securities market, market-oriented
Although countries in the maturity of the securities market, information disclosure, the quality of traders, the quality of listed companies, the corresponding policies and regulations, and many other aspects of a large difference, but one is the same, that is the law of value, so, according to the The law's theory of value investing in any market mechanism to play a major role in the stock market are applied. China's securities market, the domestic policy of the general view is that a city vulnerable to short-term impact of huge amounts of money, and there more serious manipulation of the phenomenon, so the value of the investment theory's applicability is limited in China, which is also another side note, China Securities Regulatory Commission need to strengthen supervision in this area, especially to strengthen the supervision of stock market manipulation , so that market mechanisms play a major role in the real.

(B) improve the governance structure of listed companies
First, require the operator to try to show some of the rational and strive to improve their own quality, so as to improve the stability of the company's business and secondly, information disclosure of listed companies to improve the system so that investors increase their understanding of the possibilities, so that it can predict increased, so as to predict future cash flows to provide better guarantees so that the market can more quickly find its intrinsic value.

(C) the shape of rational investors
To establish the right investment philosophy, to minimize cognitive bias, which requires investors to invest in improving their level of understanding of the object, to recognize the value of the stock ultimately to the company's intrinsic value is determined; correct treatment held short-term fluctuations in stock, to maintain a good attitude, avoid greed, fear, blind and other stupid behavior; Finally, the use of limited economic resources, concentrated investments.

IV Conclusion
Overall, China's stock market did not follow the true sense of the value of the investment philosophy because of a late start in China's securities market, development is still not mature enough, the inherent lack of institutional weaknesses and makes the system less stable stock market, securities information is not always effectively delivered to the investors, the market generally is invalid to the validity of weak-form efficiency of the state, which is the value of our investment philosophy implemented suffered adverse external environment affect the value of the investment, mainly to internal factors and the intrinsic value of listed shares deviation, resulting in the trend of investors tends to be short rather than long-term investment value of investments. the value of investment as a lasting vitality theory of value, only just emerging in China, as China's securities markets and institutional investors in the establishment and improvement of further growth, value investment philosophy will inevitably become the mainstream concept of China's stock market, which is the healthy development of China's stock market direction.


Notes:
① http://search.10jqka.com.cn/snapshot/20100621/UOx61k2Wnd2XdxJc6TgObsAppL1xnvMqJNbkbfxcrXQ.html

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