Category: Money Tips Date: 2007-01-07
Traditional economic theory tells us that an investment in time must be spread risk, putting all their eggs into different baskets, so you can spread risk to a certain extent, be profitable. Although this investment philosophy has been widely accepted, but it can not circumvent the systemic risks, such as the Internet bubble burst in 2000, the U.S. stock market experienced a sharp fall in any case diversify the investment people are still convinced that the vast majority of investors suffered huge losses.
In the stock rise and fall of the sea, or some swelling wallets, and even dreams of investors to make money naturally want to inquire of them what. Warren Buffett told a thought-provoking words: putting all their eggs into one basket, and pay close attention. So Buffett's vast portfolio, people see a few of the few stocks. However, this seems to not be the secret of successful investments, because more people adhere to the same investment principle is extremely heavy losses suffered.
Another Buffett smaller unit than the gods, a diversified investment theory, a good student, he went to the other extreme, an investment is spread with great success but also an investment person, this person is Peter Lynch. Peter Lynch a "whalebone" tactic, as found in certain types of stock or an industry stocks have investment value, he was initially not just buy a few, but all are buying, not arrested in the so-called analysis of soil . Therefore, the Magellan Fund's portfolio, people see the stock as many species there are 1400 kinds. However, this seems to have been the majority of investors can not be the secret of success, because many people stick to the same investment principles but still suffered heavy losses.
In fact, they "focus on investment" or "diversification", behind the failure of a large group of investors, there are a handful of winners. Both focus on investment in the few stocks and invest heavily in stocks or the spreading of successful investments in one thing in common, that is to invest in familiar stocks. Although there are 1400 kinds of combinations of Lynch, but in large quantities, but he always checks his portfolio of shares, to remove errors equities, and those who choose to invest their own deeper understanding of the industry or company. Of course, hard work is another weapon, he was working 12 hours a day, to read the paper a few feet thick, four laps around the earth each year to observe and investigate a listed company, and with the exchange of more than 500 corporate executives.
In fact, the traditional investment theory continue to face new challenges, but also continue to be greatly developed, but dogmatic application of these methods and theory of investment has still not earned wealth growth. Example, do the same diversification of investments, there are still many people were failures, on the contrary a small number of people who uphold the concentration of investment has been successful. Although the "efficient markets" hypothesis and the "random walk" theory, once popular and award-winning, but people in the world's most successful investors who do not see much use of the shadow of these theories, they are often associated with serious matters for stunt incompatible with classical economic theory.
Internationally renowned agencies have predicted that a number of asset management, investment theory, will enter a new stage of development, the existing economic theories can not explain many phenomena in financial markets. Wall Street has a well-known joke: people selected at random in an African gorilla throwing Darts stock picking to challenge the fine analysis of investment experts in the next few weeks, it was discovered that the so-called investment experts are not much stronger than the gorilla . Nevertheless, people still put their money to professional investors who take care of their own money, because few professional institutional investors to enable individual investors were brutally huge losses.
Economists are trying to find investors to make money in investment theory, professional bodies are trying to find investors successful investment philosophy. However, the success of any kind of investment theory and investment philosophy are inseparable from the micro-foundation for investment, we need to select stocks they are familiar with an investment object, this is the success or failure of investors to investors the distinction between differences in investment philosophy.
(Changsheng Fund Management Co., Ltd. Research Department Deputy Director)
