Xi. How to select stocks?

There are a variety of theories and methods for choosing stocks, which generally belong to the two main ideas camps-value investment and trend investment. Value-Investing believes that a stock has a relatively stable intrinsic value, unlike the price of frequent changes. such as the assets of a car company, how much debt, management level, research and development capabilities, market share, brand value geometry (analysis these are called basic analysis) ... All these factors combine to determine the value of this company. Then the value of each stock is equal to the value of the company divided by the number of shares. Of course, many of these factors are difficult to quantify, especially as the company's business prospects and other factors of different investors. But this faction of investors shares the belief that a stock does have a value, so it is worth buying when the current market price is below value, and vice versa. Because they firmly believe that in the long run, fluctuating stock prices will still tend to its true value. They don't mean short-term fluctuations in stock prices, so they are long-term investors. They study the company's financial statements and other data to judge the future prospects of the firm based on various information. The representative character is the famous Warren Buffett. Trend-based investors believe that stock prices have been the result of all factors, including the company's basic situation, the investor's capital flow, and so do not need to analyze the company's financial statements such a single data. They also think that the market volatility of stock prices is regular, by analyzing the past performance of a stock, you can speculate about its future behavior. They have been pushing a variety of indicators to develop various ways of looking at graphs, so they are called technical analysis. Because they pay more attention to short-term fluctuations in stock prices, they are short-term investors with frequent trades compared to value-investing factions.

Factors affecting the price of stock transaction

The above-mentioned two concepts of stock investment-value investment and trend investment, as well as the way the stock deal, the following can be said to affect the price of the stock transaction factors. As with any transaction, the price of each stock deal is directly dependent on the willingness of the buyer or seller, or the strength comparison. From the above transaction method can be seen, want to buy a stock of more people, large amount of money, will continue to appear higher prices, conversely want to sell a stock of more people, sell a large quantity, will continue to appear lower prices. Here said more people and less, the amount of money and small, are both buyers and sellers relative, the difference between the two sides will lead to price changes in different directions and speed, at the same time in each case, the volume also has high and low differences.

So what are the factors that determine the willingness of investors to buy and sell? We have different factors in terms of value investment and trend investment. According to the theory of value investment, all factors that affect the value of a stock, that is, the operating condition of its company, will affect the price of the stock. For example, the appointment of new managers, economic data shows the impact of the decline of car sales on the car company's stock, analysts bullish Apple's new products, food quality scandal on the impact of fast food enterprises, the country introduced to encourage home appliances to the countryside the impact of policies on home appliances Enterprises, from the enterprise management, the development trend of the industry, The policy of the state affects all kinds of emergencies, from the point of view of value investment, it constitutes the positive or negative of the affected stocks.

Trend investors are more concerned about the law of the stock price itself. They always want to from the history of the stock market summed up the rules, and then apply to the current market, they invented a myriad of indicators and countless ways to see the picture, what Gold fork, energy, Shuangfeng, three peaks, are nonsense. So is there a justification for the trend investor's point of view? The answer is yes. The stock market changes indeed have some kind of law, the logic behind is certainly not many so-called expert Discovery model and the whimsical theory, but is the group behavior Psychology in the market response, is also the financial psychology research content, as well as the stock exchange this huge system implicit statistical law. The role of psychology, for example, is the sentiment that is reflected in news and social media with the words appearing in a particular stock, and if optimism is dominant, the stock is likely to be on the rally. The common greed and fear of the individual, the herd mentality, can be seen in the formation and breakdown of financial bubbles. Statistical laws, such as we can according to the stock price and volume history and other data calculation of various statistical indicators, such as the daily closing price of no correlation, price change and the relevance of the Commission is also very small.

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Xi. How to select stocks?