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Introduction To Stocks: Invest Only In Familiar Stocks.

2010/9/30 17:56:00 67

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Investors are receptive to uncertainty in the future when they are sober minded, but when they are affected by market sentiment, greed and fear in human nature will come out, making investors bold in the future.

For example, in the stock market bubble, investors seem to have completely forgotten the uncertainty of the future. They believe that the stock market will continue to rise, thereby pushing up the stock price until it is shattered. But when the crisis comes, they will change their minds and believe that the stock market will probably collapse tomorrow.

In fact, the optimistic factor has become the leading factor at present. The reason for the ups and downs of the market is sometimes caused by the change of investor psychology from suspicion to determination.

Think about the response of the market to resolving the issue of split share structure. It seems that solving the split share structure will soon bring the market into a big bull market.

The rise or fall of the stock market is almost entirely due to the bright future that investors have assumed.

But in fact, what kind of future is it? Investors are not sure, such as plan, time, process and so on.

Uncertainty is not only the enemy of investment, but also the opportunity of investment.

If there is no uncertainty, then the stock market may be like a bond market with constant interest rates and constant inflation, and anyone will have the same return on investment.

So opportunities exist only when there is uncertainty.

Just like the last year.

After the news of the arrest of the chairman of the company on the A share market, the investors felt the great uncertainty and the stock price fell too.

But from another point of view, this is actually the end of Yili stock's uncertainty that began a year ago about the recall of independent directors.

So the company's share price began to pick up again, and its three month gain was 50%.

The story about the uncertainty of Yili stock may not be over yet. If you remember the brand of Hongta brand, you could imagine that second years after the arrest of the chairman of the Hongta company, the operation of the company could barely be maintained. In the three year, the operation of the company began to slide like a free fall.

With experience, such as technology charts or manipulation of stock prices, the uncertainty of investment is almost defeated even in China.

The development of investment philosophy and investment technology is a tool for investment to deal with uncertainty.

Investors are not powerless in the face of market uncertainty. In fact, the rapid development of the stock market in this century has benefited from the certainty of market returns.

In Canada, an insurance salesman turned out to be a very expensive boss.

What he has done is to draw the long-term yield curve of various stocks in the stock market, such as large cap stocks, small cap stocks, bonds and so on, and visually show the long-term returns of these investment varieties.

Almost all North American fund managers now buy the right to use the yield curve from him.

In the long run, the average yield of stocks is higher than that of bond yields. Although experts can not know why the stock market risk is not higher than the bond market in the long run, the yield is obviously higher than that of the bond market.

Now we know that the expansion of index funds in the past 20 years is not only due to the effective market theory of the Nobel prize winner William SHARP, but more importantly, investors have indeed made great profits.

On the other hand, if investors are not satisfied with the average earnings of the stock market, they can also get help from many active investment concepts and techniques.

The fact that 90% of the largest institutional investors in the world come from asset allocation is the fact that the core of active investment philosophy and technology is to find the maximum certainty of excess return.

So successful investors always tell you the same experience and invest only in familiar stocks.