Category: Money Tips Date: 2006-12-21
Of iron ore price increases, and the whole market knows that a shortage of iron ore; car industry is continuing price cuts, the whole market of people they are aware of this industry, there are signs of excess capacity.
Supply and demand relationship is an invisible hand, which carried Yi Tai while the commodity prices, while lower down the price of that commodity, which is Wall Street's most famous "Mr. Market" in their daily work. His every move makes a lot of people, "enchanted" also makes some other people "broken heart", no matter what he will be a cause for great concern, even if only inadvertently hit a nap, there will be a lot of investors are nervously Wu Jin as their own property.
Mr. Market does not like those who blindly follow their own people, Buffett criticized the stock market all day long without a place is right, is unexpected is that Mr. Market was especially in love with this person who refused to follow him and give Buffett's pocket plug full of money, let him become the world's second-largest rich. For those who followed their own dogma behind the "fans", those immature investors, Mr. Market becomes erratic and even some harsh, he manipulated the stock market a group of eccentric wizard, when people encounter when they are on the wallet deflated down, just when people are about to give up the bulging wallet again, so that investors who love the pain Nanshe muddle.
Laws of supply and demand not only affects the profits of industrialists, but also affect the stock market investor returns. Such as A shares of the top ten tradable shares, the stock difficult to rise, because the stock market, investors need the whole lot of access in order to push their prices higher. Conversely, if a company is only 50 million shares outstanding, the limited supply of natural and does not require a large number of investors can get into the stock continued to rise. Therefore, two similar outlook for corporate profits, the future growth are very good, the prices of small-cap stocks are often easier to increase. Of course, the small-cap stocks is also a great risk because of their mobility are relatively poor.
Excellent texture of small stocks have greater potential because of the small businesses and large enterprises the living environment is very different: large companies have been relatively stable market share, and even has monopolized the market, enterprises have no survival to worry about the bulky size of the company, management obsolete Business Innovation power decline; and small business is different, often before the listing the verge before, after full competition can survive on its vitality is very tenacious, has the potential to grow and develop. So, do the same product development, large companies tend to lack motivation, product development cost is high; while product innovation and successful small businesses may die, in the bad state under the pressure of winning and outstanding shares of small enterprises more promising.
Product innovation for small companies and large companies effect may be very different, a new product to market performance resulting from the contribution of small firms is much better than large companies, like the same glass of water poured into the small fish tanks and poured into vats, the influence of the fundamental different. Same equity-based incentives, the small company's equity incentive the more likely the success of the management of small companies easy access to more equity, because of its relatively simple organizational structure, external competitive pressure on the management of small companies than large companies are more strongly . Competitive product innovation and efficient management team is a small tool for business expansion.
Tradable A-shares time has come, the stock market will face a series of changes, investors have to face not only competition between enterprises, as well as merger and reorganization among enterprises, equity incentives, asset injections. China's stock market system will be more mature, and Wall Street of today is perhaps China's A shares tomorrow, the market will give full circulation attracted a, it would only restless big hands began to instrument the Chinese stock market up. In fact, Mr. Market do not intend to allow people to lose money, he had competition in the market to tell people what businesses can grow, he had to tell people that supply and demand which stocks make money. Mr. Market is only a pair of invisible hands, his preference for sophisticated investors only.
(Changsheng Fund Management Co., Ltd. Research Department Deputy Director)
