Category: Money tips Release Date: 2006-02-21
What is the value investing philosophy in the end? Its meaning and operation of application do? Us for some parsing.
First, the value of investment in basic categories
The so-called value investing, refers to the impact of investments in securities of economic factors, political factors, the development prospects of the industry, the listed company's operating results, financial condition and other factors based on the analysis in order to market the company's growth and the development potential of the major concerns in order to to determine the intrinsic investment value of the stock for the purpose of investment strategy. Philosophy of value investing, Benjamin Graham's classic originated in the "investment analysis" to Warren Buffett is famous for the successful practice of community. The essence of value investing is the stock through the fundamentals of economic analysis, the use of financial asset pricing model to estimate the intrinsic value of the stock, and through comparison of stock prices and intrinsic value and invest in those markets to find prices are lower than their intrinsic value of the potential of stocks, in order to obtain more than the growth rate of market index excess return. In general, the value of investment, including macroeconomic analysis, economic analysis, and meso-micro-economic analysis.
First, macroeconomic analysis is the premise of value investing. Macro-economic analysis to the country's overall economic trends and economic policy direction for the research base, the main research of gross domestic product (GDP), employment situation, inflation, balance of payments and other macroeconomic indicators, the impact on the securities market and the combination of fiscal policy and monetary policy trend analysis, to analyze and forecast macro-economic trends, in order to judge the broader market trend. Sensitive to national economic policy, securities markets, therefore, on the national budget, taxation, investment policies, interest rates and exchange rate fluctuations analysis is the basis of the value of investment patterns. In recent years, China's macroeconomic situation is an excellent, rapid and steady economic growth, which accelerated to enhance the performance of blue-chip stocks, but also makes the value investing philosophy gradually the market generally recognized.
Secondly, the concept of economic analysis is the basis of value investing. Meso-economic analysis is mainly directed against the status quo and prospects of the industry study, in order to determine the growth of different industries. Although all departments are in the same macro-economic situation, but different industries, their profitability levels, and prospects for development are different.
Finally, the micro-economic analysis is the key to value investing. Micro-economic analysis of a listed company's financial situation and development potential as a research base. Value investing philosophy that the quality of listed companies stock market performance is directly related to the merits of the company, with investment value of the stock not only have good performance, but also to be able to maintain long-term stable development. Therefore, value investing is not just concerned about the historical level of profitability of listed companies, but also through the company's industry competitiveness, the manager level management capabilities, comprehensive evaluation of a variety of financial indicators such factors as co-ordinating up analysis, forecasting company in the future of the profitability, which is the focus of analysis of the value investment philosophy in focus.
The most successful application of value investing course ought to Buffett-led Berkshire - Hathaway Corporation. 40 years ago, the company is one the verge of bankruptcy mills, in Buffett's elaborate operation, the net per share to grow from the original 19 yuan to 41,727 U.S. dollars in 2002, the annual compound growth rate of about 22.2%, far exceeds the S & P500 index over the same period the growth rate. Buffett believes that the key to the success of investment depends on the real value of enterprises and payment of a reasonable and cost-effective transaction price, without having to care about the stock market recently or in the future will be how to run. Thus, in evaluating a potential transaction, or to buy stocks, investors, business owners should first be to the point of view to measure the company's operating system and all the qualitative and quantitative level, the financial position and can be purchased price. Buffett's investment decision-making advocated by the basic principles can be summed up as business principles (which the company is simple and you can know? The stability of the company's operating history? The company is optimistic about the long-term vision of development), operating principles (whether the operators are rational? operators are honest and frank shareholders do? operators will follow blindly other's behavior), financial principles (to focus on return on equity, rather than earnings per share), and the market principles (which is how much real value of the company ? able to significantly discount the value of the company's stock purchased). In the value investment philosophy under the guidance of the Berkshire Group's investment in shares of Coca-Cola, American Express, Gillette, Disney, Time Warner, Salomon brought the company and so its huge returns.
Second, the value of an analysis of the steps
1, from the macro, meso to the micro-economic forecast surface
Value investing is concerned that a listed company's future growth, so the need for GDP, the industry's future market conditions and the company's sales revenues, earnings, costs and expenses as accurately as possible to make predictions. There are probability forecasts forecasting methods and econometric models to predict two kinds.
2, screening with development potential industry
Through macro-economic forecasting and economic analysis of the industry, investors can determine the stage of the current economic and development trends within the next few years, so that can further determine the next few years may have greater prospects for development within the industry.
3, estimate the intrinsic value of the stock
For investments in established industries, the need for the selected stocks within the industry for the intrinsic value analysis. Estimates of the intrinsic value of the stock there are a number of ways, in general, dividend discount model is the most simple and widely used.
4, screening with the investment value of the stock
Value investment philosophy to efficient market theory, that the efficient market mechanism to make the company's future share price and intrinsic value are consistent, so when the intrinsic value of the stock exceeds its market price, there will be undervalued phenomenon, its market price in the future is bound to revise its intrinsic value. As the stock market there is information asymmetries, so the intrinsic value and market price of the deviation is a common phenomenon. Thus, by the above analysis, investors can identify the intrinsic value greater than the market price of the stock, such stock is the value of the investment strategy to be looking for stocks.
Third, in 2004 the value of investment strategy options
Since the first half of 2003, value investing has become the mainstream of the Shanghai and Shenzhen stock market investment patterns in order to iron and steel, automobile, electric power, energy and other blue-chip stocks with the potential development of the industry has become the market's most influential and appealing plate. Value investment philosophy has been to promote the management of not only recognized but also more mature markets, investment philosophy, the mainstream investment patterns shift from the purely speculative pay more attention to the fundamentals of value investing. In 2004, the stock market will continue to uphold the concept of value investing, has a good growth of industries and companies will continue to be the market's attention.
First, national economic growth is closely related to the industry will be further opportunities for development. In 2004, China's economic growth is expected to maintain a good momentum of development. Therefore, the automobile, electricity, energy sector will face a huge space for development. Meanwhile, with the smooth progress of China's financial system reform, banking and securities class will significantly enhance the performance of listed companies, with a high investment value.
Second, the industry's leading stock will be strong Hengqiang. In the value investment philosophy, the leading stocks in various sectors in the most investment value of the shares. Such companies often share a great, competitive advantages are obvious, performance steady increase in investment risk, less vulnerable to institutional investors of all ages.
Thirdly, investors should be concerned about the performance of the company's durability. With the investment value of listed companies, not only have good performance, but also to have long-term ability to maintain stable growth, the only way investors could share listed companies, the benefits of growth.
Finally, the performance value analysis is not the only factor. Even if the expected good performance of the company, if its stock price is too high, so that the intrinsic value is less than its market price, this time, there appeared the phenomenon of overvaluation, the market mechanism would allow stock fell to its intrinsic value level.
