Category: Money tips Release Date: 2007-02-06
Stick 28 is the law of doom to 20% of the hot stock squeeze, or search for "long tail" of the Road, in the remaining 80% of the shares in search of opportunity? All this ultimately depends on whether the market for a wide range of investors to provide a wide range of investment products
The late 19th century early 20th century, Italian economist, found a bale, more interesting phenomenon, that is, in any one group of things, 20% is important, while the remaining 80% is always in a secondary position. For example, 20% of the customers 80% of their income, 20% of the people control 80% of the wealth, 20% of the project has created 80% of the profits, or even 20% of the people enjoy 80% of the love. This is the law of the famous 28. In China the stock market, investors in the "28 phenomenon" is not unfamiliar.
However, a few years ago there's another kind of thinking causes people to re-understanding of the laws of 28, which is the "long tail theory." "The Long Tail," that if were able to find a way to meet the 80% of the "long tail demand", then the sum of these needs formed a potential market, and perhaps no less than any hot products in the market.
The stock is actually a product is determined by a lot of people to create and maintain a product, stock investment is the demand for this product. The analysis of the diverse needs of the stock of this product may be able to provide us with another perspective the market.
Ultra-short-term guest: For these investors, the stock level of activity is high, liquidity is good, the most critical transaction cost is low, while the fundamental factors, but is not important, as the daily random fluctuations and the fundamentals of correlation is not Great. Therefore, the stock index futures, warrants and active stock has become the most popular ultra-short-term customer choice.
Trends investors: In principle, these investors willing to invest in all classes of stock, but in fact these investors more inclined to invest in short-term volatility significantly increased stocks. A large number of high-priced blue chip stocks in most cases, there is no such performance, so more speculative small stocks and financial derivatives are often the first choice of such funds.
Long-term value investor: These investors are more concerned about the long-term trends in fundamentals for the short-term stock price fluctuations are not sensitive. Valuation is reasonable and undervalued stocks as their preferred medium and large.
Strong investor: These investors of investment volatility and downside risk is more sensitive, and I would rather sacrifice some income in pursuit of investment products, income stability. Balanced Fund, the broader market blue-chip and some structured products is their favorite.
Gambling investor: These investors, adventurous spirit, I believe the myth of overnight riches, this could be at any cost. Uncertainty means that the opportunity, so have the assets reorganization, the overall stock market and other topics news is their most favorite speculation.
In fact, the type of investors should be more than the above, the investment demand is more diversified than the above-mentioned. Diversified investment demand had always been there, even if sometimes they are suppressed.
Before this bull market, the stock market can be said that there are only two products: "health food" and "drugs", which is 20% of the fund Awkwardness and 80% of other stocks. These "other equities" include ST Unit, the underperformance as stocks, high price-earnings ratio stocks, and even including some in other markets, has performed well the value of shares (the value of assets with poor profitability, high stock). After several years of bear market, only the consumption of "health food" where consumers will be the overall profit, but buy "drug" consumers, those who like taking drugs, as are all deeply hurt by the lucky kick the tires, leaving the stock market, and the more people will become drug addicts, and let them go, we call it stuck.
In a bear market, in addition to long-term value investor demand may be fully met, other types of investment needs of investors are being repressed, and even sound are also investors in a bear market decline in the non-rational suffer. When the stock market can only meet the needs of a group of investors, the overall demand becomes insufficient, we are in a shortage of economic era. This case, even if the majority of stock funds flock to 20% of the blue-chip stocks, even if the GDP in high-speed growth, the haze is also lingering bear market.
Bull market comes, of course, The Awkwardness of Fund's performance has been excellent, while the other types of stocks because of active trading, as well as changes in the internal interest mechanism, but also has a profitable opportunity to temporarily change the "drug" properties. Pent-up demand to find ways to release, while in the case of lack of investment products, ST stocks, cap, lower re-shares, stocks or even small-cap stocks news, in a sense became a substitute, which appeared over speculation, few kilometers from heaven a mirage of prosperity. Market as a whole needs are short-term satisfaction. That is, the same GDP growth in the context of why China have more than four-year bear market, you can in a short span of one year, from the bear market to almost out of control mad cow city. Among these split share structure reform is certainly contributed, but the diverse investment needs to be released is also one of the factors can not be ignored.
False prosperity can not be sustained, it is a backdrop of a lack of market investment products. The phenomenon of excessive speculation and 28, are a large number of investment demand, investment in the face of a limited variety of abnormalities when the by-products, essentially unhealthy.
Speculative stocks, after all, merely substitutes, demand for a firm foundation. When the regulators began to aggressively crack down on speculation, when a large number of non-mainstream investment demand, be re-repressed. Therefore, the stock market yesterday, perhaps we are still in the steady flow of new funds and excessive speculation and worry, today, we suddenly find that even short-term liquidity of the stock market turning point occurred, the overall lack of demand appears that some of the.
Dilemma. How to do?
The first approach, of course, vigorously promoted the value of investments, the Fund is to encourage consumption of Awkwardness or blue-chip stocks. This of course has its advantages, but the possible consequences should not be overlooked: First, a number of other investment demand has been suppressed, and thus the overall demand has been suppressed, the so-called dry river water stream, the stock market as a whole center of gravity down; the second is the market re-back to the shortage economy era, a lot of money to re-influx of a small amount of blue-chip stocks, resulting in blue-chip bubble, and when these stocks are seriously over-estimated, the market as a whole becomes unattractive, in the neighboring markets, competition, demand is divided, the market re - trap downturn.
The second approach, it is vigorously developing the financial innovation and to provide more and newer products to meet investors, and guide, rather than suppressing the diversified needs of investors. Markets and new products will not result in the emergence of the total funds declined, on the contrary, the new products will bring new demands, the market's overall purchasing power, but will rise, while speculative stocks and those that underperformance compared to most of the new products more or less a "health food" feature, investors are guaranteed the health of the stock market's healthy development and will have a guarantee. (The author is BOCOM Schroder Fund Management fund manager)
