Category: Money tips Release Date: 2006-05-12
2006 China's stock market has been crazy the past, for those who wish to have this year, the gains of the investors, what is most important?
To judge the market is up or down more than up the market to determine the number of points is more important. Their rush to predict how the stock market can go as high points, he might as well predict in 2007 the market is up or down. My answer is, the market will rise, smart investors will make money. Because we have the valuation of the stock market while not cheap, but still reasonable, macro-and micro-economy is still vibrant, capital is still abundant, the yuan will appreciate every aspect of the market continues to improve and enhance the surface. So, in 2007 the risk of holding stocks is less than the risk of holding cash.
To understand the market's price levels the market is more important than predicted. How much the market can go as high point? The market will be altered? These days, it seems that everyone is asking and answering with a such a problem. My view is that, as in the beginning of 2006 few people predicted the year above the high point in 2600, as in 2007 rose to the number of points is possible (though, I think it rose to 5000 points less than the percentage of the possibility of one). Of course, if the market is also possible to adjust immediately. However, the important thing is not how accurate your predictions, but when the market reaches a point and time, you can determine at what stage of the market. Smart investors and retail investors, the difference is that when the market bubble began to form, the former would perceive and use it, and the latter a result of irrational and lost. When the market sometime this year, to stand for more than 3500 points, I will become wary.
Able to make money to buy the stock market is up more than forecast is down even more important. Is to buy shares of a small rise in 2006 in order to expect these stocks to catch up, or to buy 2006 shares the expectation that their persistent efforts of the star? I tend to buy stocks in 2006 the star. Anything will happen behind the reason. If some stocks to become a star in 2006, but the reasons behind, and did not disappear, then these stocks are still likely to become a star in 2007, as long as their valuations have not yet far beyond the reasonable level. Of course, if I bought in 2006's laggards, it must be because the changes in fundamentals, not just because it is those left behind.
Look at an example. A few years ago, the United States George Thomas University of Houston and Hong Kong University of Science and Technology Chuan-Yang Hwang had done such a study, they tested the U.S. market, 1963-2001 years of transaction data and to develop a dynamic simulation of each combination, this combination just bought a record 52-week high just short of the stock and the stock hit a 52-week lows. As a result, this combination an average annual rate of return higher than the market average of 7.8%, and such a combination in the next five-year period there is still a good performance. Their explanation is that people usually have the stock will rise higher and not psychological dares to buy, so that these stocks still have a longer time to reach their desired price range.
In addition, no longer a cheap market, we need not only the conventional business growth, we also need to "surprise." The high rate of return on capital stocks, stock performance and the interests of management or major shareholders close to stock, earnings per share in 2006 forecast at the beginning than the largest stock market in 2007, the industry a big "action" in stock, next year there will be more good performance. Because these stocks are will give us the name of surprise.
What to buy when stocks than buy stocks even more important. Smart shoppers buy in the summer, autumn and winter clothing, at the end to buy computers and television, after New Year to buy luxury goods. Less of others when needed you will need to buy things, this little wisdom also applies to buy stocks. If the market next year, major changes, while the adjusted stock price becomes reasonable, and remember to do that smart shoppers. If you can not determine when the time is right, then hard to judge what is right stocks. Right at the wrong time to buy stocks, the final results go wrong. Of course, if you can at the right time to buy the right stocks, congratulations!
Professional knowledge is more important than technical indicators. Foundation outperform index do? I think that the equity fund outperformed the index as a whole is not the probability. Because next year's broad market index of blue-chip return will still push down prices, and individual accounts for the main index of large capitalization stocks is still higher than the weight allowed by the configuration of the proportion of the fund. However, the same as in 2006, the Fund as a whole or individual investors will continue to significantly exceed the overall benefits. Although such funds that industry professionals often been questioned, but in any case, professional investors for research time far more than ordinary investors, but also more organized and systematic. In addition, for many fund managers, the work is not only means of livelihood.
Reasonable expectations of the judge than in the beginning is more important: I am not saying that the 2007 harvest in 2006 would certainly be worse. However, as many investors thought the same as in 2006 to reflect reasonable expectations will bring peace of mind, but peace of mind in order for an investor is always to stay calm. So, if in 2007 you invest in the fund or stock returns at about 30%, you can not help a bit disappointed at the same time, do not forget the benefits in many other markets is still difficult to get.
Concluded that the sentence: calculate their own retirement, how much money it will cost far more in order to become a millionaire is more important. Despite a strong stock market wealth effect, but investing in stocks, you simply a means to improve the quality of life, take good care of you and your loved one's life is the purpose. So, when they see other people making money that the risk to do their financial planning and maintain a reasonable asset allocation, it is important! (The author is the sea Fortis fund managers)
