Category: Money tips Release Date: 2006-02-20
Shanghai and Shenzhen stock markets recently, even new lows. Index, a low stock price, it is naturally concerned about the problem of the value of their investment. Fell in such a way, and this market, whether there is investment value out?
First of all, we need to understand where the stock market rising momentum. Peacetime often heard such remarks, said that China's GDP every year, more than 8% growth, has been on why the stock market fall did not become a barometer for the economy. But the GDP reflects the gross domestic product, driving the market rally should be profitable growth, GDP growth may not necessarily be a simultaneous increase in profits, even if the GDP growth every year, does not mean that the stock market to rise.
Next, we can discuss the index and stock valuation. Price-earnings ratio (P / E) is a general understanding of the investing public judgment methods, but would like to remind everyone that the Shanghai Composite, or Shen Chengzhi of the price-earnings ratio is actually not much more value, because well-known overseas markets, the Hang Seng Index, the S S & P 500 are large sample of index stocks, so to compare, it should be with the "SSE 50" Such a similar index. Of course, the better is the use of the S & P or FTSE index system to complete such a comparison.
In fact, it is necessary to determine the correct index of the level of stock price alone, price-earnings ratio (P / E) is not enough, the general European and American analysts at least to make reference to book value (P / B) and interest rates for these two important indicators. For individual investors, the interest rate is the most important indicator because it is a true reflection of the investment value of the indicators that reflect the stock you can hold how much dividend targets.
However, as the Shanghai and Shenzhen stock market development period is too short, and the specific context of tradable shares, the average of the past 10 years, this market is not necessarily a reasonable level, in this sense, P / E, P / B, or the interest rate Such indicators, and other similar markets only have comparative value, rather than with the other markets, all the "mean reversion" of direct diagnostic value.
Therefore, the Shanghai and Shenzhen stock market, I pay more attention to free cash flow discount model for individual stocks. On the one hand, given the free cash flow and profit, avoid a number of listed companies to manipulate profits, practices, and a number of the accounting system for the profit misleading; the other hand, interest rates are not nearly so free cash flow will be affected by management's dividend policy impact. Warren Buffett is the most valued investment, this target. The use of free cash flow discount model, can be in Shanghai and Shenzhen stock markets to take into account some special cases, such as the relatively high speed of development, such as required for high-risk high-return requirements, and so on, if multiple parameters for this model can have a more reasonable set-up and estimates, it can get a more reasonable valuation for the stock. Of course, since free cash flow model calculations are quite complex, not easy for ordinary investors, so I hope to see more of the securities analyst in the mass media for investors take advantage of this model to analyze the current with what kinds of individual stocks is more investment value.
