How Do I Choose the Best Total Stock Market Index Fund?

Stock selection is the process of stockholders in the stock market through long-term observation, analysis of trends, and then choose their own fancy, optimistic about this stock.

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Stock selection is the process of stockholders in the stock market through long-term observation, analysis of trends, and then choose their own fancy, optimistic about this stock.

Chinese name

Choose stocks

History

Development has so far 2100 shares

Basic strategy

Value discovery

Scope of application

Not applicable to super large-cap stocks and new listings

Thousands of A shares have developed in China's Shanghai and Shenzhen stock markets so far. After ten years of ups and downs, investors have gradually matured. From the early rise and decline of individual stocks to the present, it has completely bid farewell to the era of rising and falling. From the market analysis of the past two years, the proportion of stocks that rose in each rise was only about 1/2, and the stocks that exceeded the market were rare. Many people even judged the trend, but because of stock selection deviations , Still unable to obtain profit, we can see the importance of stock selection for investors.
The first section of the basic strategy of stock selection how to properly choose stocks, more than 100 years of people have created a variety of methods, people feel dizzying, but no matter how many changes, can be summarized into several basic investment strategies.
I. Value discovery:
It is Wall Street's most traditional investment method. In recent years, it has also been recognized by Chinese investors. The basic idea of the value discovery method is to use some basic indicators such as price-earnings ratio and price-to-book ratio to find undervalued stocks. Because this method requires analysts to have considerable professional knowledge, it has certain difficulties for non-professional investors. The theoretical basis of this method is that prices always return to value.
2. Select high-growth stocks:
This method has become more and more popular at home and abroad in recent years. It focuses on the high growth of the company's future profits, while traditional value judgment standards such as price-earnings ratios seem less important. With this value-oriented stock selection, people are most interested in high-tech stocks.
Third, technical analysis stock selection:
Technical analysis is based on the following three assumptions: (1) market behavior covers all information; (2) prices change along trends; (3) history repeats itself. Under the premise of the above assumptions, stock selection based on technical analysis methods usually does not usually pay much attention to the fundamentals of the company's operations and financial conditions. Instead, it uses technical analysis theory or technical analysis indicators to select stocks through the analysis of charts. share. The basis of this method is the volatility of the stock price, that is, no matter how much the value of the stock is, there is always a periodic fluctuation in the stock price. Technical analysis of stock selection is to find outperforming stocks and capture profit opportunities.
4. Portfolios (index funds) based on large-scale indexes:
With the increase in the number of stocks, many people find that it may be possible to accurately judge the general trend, but it is too difficult to choose the right stock, and it is becoming more and more difficult to obtain more than average returns. It often takes a lot of manpower and resources to obtain The effect is similar to, or even worse than, the broader market. Instead, it is better not to make any analysis of stock selection, but to refer to the composition of the index to make an investment portfolio, at least to obtain investment returns that are synchronized with the broader market. If there is an index fund that is consistent with the broader market, investors do not need to choose stocks. They only need to buy the fund when they are optimistic about the stock market and sell them when they are short of the stock market. Since index funds have not appeared in China, investors cannot invest according to this strategy, but the idea of this method can be used for reference.
The above strategy is mainly based on two basic analysis methods of securities investment, namely basic analysis and technical analysis. From the basic stock selection strategy mentioned above, various stock selection methods can be derived. In addition, with different market trends and market hotspots, there will be different stock selection strategies and methods at different stages of the development of the stock market. In addition, different people will create their own unique stock selection methods and stock selection techniques.
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Section 2 Basic Analysis Stock Selection Basic Analysis Stock selection, that is, to analyze the basic situation of the company to be invested, including the company's operating conditions,
The management situation, financial status and future development prospects are determined by researching the intrinsic value of the company to determine the reasonable price of the company's stock, and then determining whether to buy the company's stock by comparing the difference between market price and reasonable pricing.
One. Company's industry and development cycle The development level and speed of any company are closely related to its industry. Generally speaking, any industry has its own life cycle of generation, development and decline. People divide the industry's life cycle into four stages: the start-up stage, growth stage, stable stage, and recession stage. Different industries experience these four stages. The length of time varies. Generally in the start-up period, the profit is low and the risk is high, so the stock price is low; the profit in the growth period is greatly increased, the risk is reduced but still high, the industry's overall stock price level has risen, and the stock stock price has fluctuated more; The growth rate is reduced, the risk is small, and the stock price is relatively stable. The industries in the recession period are usually called sunset industries. The profits are reduced, the risks are greater, and the financial situation is gradually worsening. The stock price is in a downward trend. Therefore, the company's stock price has a certain relationship with the industry.
Generally, when choosing individual stocks, we must consider the influence of industry factors, try to choose stocks in high-growth industries, and avoid choosing stocks in the sunset industry. For example, China's communications industry has been growing at a rate of more than 30% per year in recent years. The industry's development rate is much higher than China's economic growth rate. It is a typical rising industry. Communications listed companies are favored in the stock market and their market positioning Usually higher, often becomes a high-priced aristocratic stock in the stock market. In addition, stocks such as the bioengineering industry and the electronic information industry are also highly sought after for their high growth and bright future.
The stock price of a listed company is more affected by its own development level and profitability. Any company, similar to the industry development cycle, also has its own life cycle, which can also be divided into the start-up period,
Growth period, stable period and recession period. Take Sichuan Changhong in the home appliance industry as an example. From its inception to launching its own well-known brand, it has experienced 11 years of rapid growth and has now entered a mature period. Its stock price has also experienced more than ten times of madness in a few years. Stabilized afterwards. Another example is the large-cap stock New Steel Alum in the Shanghai Stock Exchange. Although it belongs to the steel industry considered as the sunset industry, due to its good management and management level, in 1998, it achieved a remarkable performance of net profit growth of more than 100%, indicating that the sunset Chaoyang enterprises can still appear in the industry. The above facts show that the industry development cycle and the company's own development cycle can sometimes be very different. Investors must consider both the industry cycle and specific issues when analyzing stock selection.
In China, due to the generally small size of the company, the weak ability to resist risks, and the strong short-term business thinking of the company, it is difficult to obtain long-term sustainable and stable development. Listed companies often have short-lived ones. The difficulty of stock selection has increased to a certain extent.
two. Analysis of the company's competitive position and management situation The laws of the market economy are the survival of the fittest, and companies without a competitive advantage are destined to gradually shrink and die out over time. Only by establishing a competitive advantage, and through continuous technological updates and development of new products, etc. Various measures to maintain this advantage can the company exist for a long time, and the company's stock has long-term investment value. The first factor that determines a company's competitive position is the company's technical level, followed by the company's management level. In addition, market development capabilities and market share, economies of scale, project reserves, and new product development capabilities are also important aspects that determine a company's competitiveness. An analysis of the company's competitive position can give us a perceptual understanding of the company's future development. In addition, we also need to analyze the company's operation and management situation, mainly from the following aspects: the quality and ability of management personnel, business efficiency, internal management system, reasonable use of talents, etc.
Through the analysis of the company's competitive position and operating management situation, we can have a deeper understanding of the company's basic qualities, all of which are very helpful to investors' investment decisions.
three. Company financial analysis If we say that the analysis of the company's competitive position and operating management is mainly qualitative analysis, then the financial analysis of the company's financial statements is a quantitative analysis of the company's situation. The method of company financial analysis has been introduced in detail in Chapter 5 of this book, and will not be repeated here.
four. The company's future development prospects and profit forecast Investors can comprehensively analyze all aspects of the company's situation and make a basic estimate of the company's future development prospects.
The analysis method is mainly considered from the aspects introduced above. In addition, by analyzing the company's product output, cost, profit margin, various expenses and other factors, it can predict the company's next period or periods of profit in order to make a certain amount of estimation of the company's intrinsic value. This work is generally performed by professional analysts due to its strong professionalism.
Although it is difficult for ordinary investors to predict profits, they can still make a rough estimate based on the information they have, which is beneficial to the investment decision of stock selection.
Fives. Discovering the company's existing or potential major issues. In addition to detailed analysis of other aspects of the company when selecting stocks, we must also analyze the company's annual report, interim report and other types of disclosure information to find out whether the company has or Potential major problems, timely adjustment of investment strategies to avoid risks. Because each company's industry, development cycle, operating environment, region, etc. are different, the existing problems will also be different. We must make a specific analysis for each situation.
There is no fixed analysis mode, but major problems that commonly occur are easy to appear in the following areas:
1. There are great problems in the production and operation of the company, and it is even difficult to continue the operation. There are great problems in the production and operation of the company. The continuous operation is difficult to maintain, even insolvent, and is on the verge of bankruptcy and failure.
2. Major lawsuits in the company Due to debts or joint and several liabilities of guarantees, major lawsuits in the company have involved huge amounts of money. Once the debts are established and repaid within a time limit, it will seriously affect the company's profits, have a significant impact on production and operation, and may also affect the company's reputation Great damage. More serious companies are also at risk of bankruptcy.
3 The investment project failed, and the company suffered a major loss. The company used equity funds or debt funds to invest in the project. Due to insufficient estimates in advance, or major changes in the investment environment, changes in product sales, or technical difficulties, it made the investment The project failed, the company suffered significant losses, and the company's future profit forecast changed significantly.
4 Find major problems from financial indicators From some financial indicators, you can find major problems in the company. (1) The absolute value and increase of accounts receivable are huge, and the turnover rate of accounts receivable is too low, indicating that the company may have a major problem in recovering accounts; (2) The huge increase in inventory and the decline in inventory turnover rate are likely There is a problem with the company's product sales and product backlog. At this time, it is best to further analyze whether the raw materials have increased or the finished products have increased significantly. (3) The amount of related party transactions is large, or the parent company of the listed company occupies a large amount of funds of the listed company, or the sales of the listed company Most of the amount comes from the parent company. The profit may be false, but it is necessary to carefully analyze the related transactions. Maybe all transactions are normal and legal. (4) The profit is false. It is difficult for investors to find this problem, but some of them can be found. Clues, for example, net profit mainly comes from non-main profit, or the company's operating environment has not changed significantly, but the net profit of a certain year has suddenly increased sharply. With the implementation of China's securities law and the improvement of regulatory measures, this A problem that besets investors is expected to gradually improve.
Example: Qiong Minyuan (0508), the company's performance changed abruptly in 1996. Net profit jumped from 380,000 in 1995 to 485 million yuan, and earnings per share were as high as 0.87 yuan. The stock is a star stock in 1996 and early 1997. The stock price has doubled in more than a year, and has become a high-priced stock with a rocket-like speed. At the moment, the stock has followed suit. Many shareholders are holding Qiong Minyuan as a fashion. . However, careful investors will find some major suspicious things. The company's main business profit in 1996 was only 390,000 yuan, while other business profits were as high as 441 million yuan, and investment income was 30.15 million yuan. Such a income structure You can't help but make a big question mark about the company. Sure enough, due to false profits and other issues, the stock has been suspended since March 1, 1997, for a total of more than two years. The financial loss and psychological pain suffered by investors in this stock are undoubtedly huge, and if investors originally listed the company as a problem company, stay away, the result would not be so painful. (Although the government intervention finally resolved the Qiong Minyuan incident, it should still be a warning for small and medium investors)
In short, investors must be cautious in choosing stocks of problem companies, and it is best to stay away.
Avoiding problem stocks should be the basic principle of applying basic analysis methods.
six. Using basic analysis methods to select stocks based on price-earnings ratio indicators, we can determine the company's reasonable price through indicators such as earnings per share and price-earnings ratio, and comprehensively consider factors such as the company's sector, share size, and company's development prospects. If the price is undervalued, then As a candidate stock, choose to buy.
In this method, the price-earnings ratio is the most important reference indicator. There is no absolute standard for where the price-earnings ratio is reasonable. The average price-earnings ratio of each country and region is also very large. The average price-earnings ratio of the European and American countries' stock markets often remains at 20 Times, Japan is more than 60 times higher for a long time.
In recent years, the average price-earnings ratio of China's Shanghai and Shenzhen stock markets has fluctuated within a range of 30-50 times. Generally speaking, about 30 times is a low-risk zone, and about 50 times is a high-risk zone.
From the perspective of investment value, if we take the one-year bank deposit interest rate as a risk-free rate of return, the level of return higher than this rate of return in the stock market is acceptable. For example, we use the current one-year bank The deposit price of 3.78% corresponds to a price-earnings ratio of 26.5 times. As a standard for judging the value of stock investment, stocks lower than this price-earnings level can be considered to be undervalued and have investment value.
However, if we only consider the problem from this perspective, we must make mistakes, because the price-earnings ratio is greatly affected by some factors.
First, the price-earnings ratio is closely related to the industry in which the company operates. For example, the biomedical industry, as a high-growth industry, has always been highly positioned in the market, with a price-earnings ratio of 50 to 60 times. It is not uncommon for the big bull stocks in 1997. As a leading stock in the electronic information industry, the price-earnings ratio once reached 70 Times; and the steel sector stocks that were once extremely unfavorable, the price-earnings ratio often hovered around 10 times.
Secondly, the price-earnings ratio is also affected by the size of the equity and the stock price. Generally speaking, stocks with smaller equity are more favored, and their market positioning and P / E ratio are higher. Some people have made this a small company effect. Baze in the United States first studied this phenomenon in 1981. He divided the stocks listed on the New York Stock Exchange into For the five categories, it is found that the average return on the stocks of the smallest group of companies is higher than the average return on the largest group of stocks by 19.8%. According to my observation,
The effect of small companies in China is more obvious and presents different characteristics. Due to the existence of non-tradable shares, the price-earnings ratio is more closely related to the tradable shares. In addition, the preference for low-priced stocks is a major feature of China's stock market. The lower the stock price, the higher the price-earnings ratio, and sometimes the stock is only a few cents per share. The stock price is considered to be cheap if it reaches 5 or 6. Is the performance of mature markets, but at the moment, when judging the level of the price-earnings ratio,
We must also consider the impact of this factor.
In addition, the company's high growth has a significant impact on the price-earnings ratio. As the saying goes, buying a stock is buying the company's future. A stock that has good expectations for the future will naturally have a high stock price. The better the company's future prospects and the higher its growth, the higher the price-earnings ratio. So how to measure this factor, we introduce the concept of dynamic price-earnings ratio here. From the formula of price-earnings ratio, we can see that the price-earnings ratio is the ratio of the stock price to the earnings per share. For different stock returns, we can calculate three types of price-earnings ratio, namely price-earnings ratio , price-earning ratio , and price-earnings ratio .
Price-earnings ratio I = stock price during the study period / earnings-per-year earnings-per-year ratio = stock price during the study period / interim earnings per share × 2
Price-earnings ratio = stock price during the study period / expected earnings per share ratio for the current year is based on the assumption that the company's earnings per share during the study period is the same as the previous year's earnings, and the earnings per share of the previous year can't actually reflect the actual operating situation of the company And profitability, so the price-earnings ratio does not truly reflect the actual price-earnings ratio, and its role is greatly reduced. For example, a stock with a price-earnings ratio of 100 times, if its profit doubles, the actual price-earnings ratio will drop to 50 Conversely, a price-earnings ratio I is only 20
If the stock's profitability declines sharply, its price-earnings ratio will greatly increase. After the announcement of the interim results,
Many people use the price-earnings ratio to select stocks. The shortcomings are also obvious. The company's first-half earnings are not equal to the full-year earnings, and sometimes there is a large gap. As the company's future earnings per share is difficult to predict and there are too many uncertain factors, the price-earnings ratio is likely to differ greatly from the actual situation, but in any case, it is a conclusion obtained by people's comprehensive analysis of the company's situation, which has very Great reference value. Although the three types of price-earnings ratios have their own shortcomings, after all, they are an important basis for investment. We will combine the three types of price-earnings ratios to consider the issue more comprehensively.
From the above analysis, we can see that the price-earnings ratio is affected by a variety of factors, so we should look at the price-earnings ratio dialectically, and we should consider the price-earnings ratio and growth together. Among companies with similar growth, stocks with low price-earnings ratios should be selected. If a company has good growth, it can still intervene even with higher price-earnings ratios.
Examples of choosing high-growth stocks: ZTE Corporation ZTE Corporation is a company in the telecommunications industry. It went public in November 1997 and has been positioned relatively high since the listing.
The stock price is hovering at around 20 yuan. At the beginning of 1998, the 97 annual report was announced, with earnings per share of 0.46 yuan. After the publication of the annual report, the stock has not fallen sharply. When the minimum adjustment is only 21 yuan and the price-earnings ratio is 45 times, it will start a wave of rising prices.
The stock price rose to a maximum of 37.88 yuan. Based on the results of 1997, the price-earnings ratio was as high as 80 times. The reason is that investors are generally optimistic about the company's future prospects and predict that it will maintain a rapid growth momentum in 1998. really,
The 98-year performance of the stock subsequently announced was 0.47 yuan / share, and the full-year performance of 1998 reached 0.97 yuan / share after the expansion of 10 shares and 3 shares. The company's net profit increased by more than 100%, and the price-earnings ratio of the stock has dropped significantly. If an investor in the early 1997, after a careful analysis of the company's fundamentals, determined that the company is in a high-speed development stage, the profit growth in 1998 is expected to reach 100%, that is, it is expected to reach 0.90 yuan per share in 1998. The stock price is 21-24 yuan. Based on the 1997 performance, the price-earnings ratio is 45-52 times, but the price-earnings ratio .
It was only 23-27 times, and at that time, the positioning of high-tech stocks in the market could reach 35-40 times the price-earnings ratio, that is, the price of the stock was expected to reach 36 yuan. At this time, the stock price was far from the expected price (50 %), The investment value appears, even if there is a certain deviation in the forecast, it will still not cause losses, and the market risk is small,
At this time, if the investor buys decisively and sells on the last day of 1998, he can make a profit of 60%.
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Section III Technical Analysis Stock Selection In the actual combat of stock market investment, the method of stock selection using the company's fundamentals is mainly applicable to professional investors. For the majority of small and medium investors and stockholders who use their spare time to stocks, regardless of time, energy and There are certain difficulties in terms of required knowledge and information. Therefore, the application of this method to the majority of small and medium shareholders has limitations. The technical analysis and stock selection, because it does not require much expertise, is straightforward to consider, and is closely connected with the market. It is also relatively easy to obtain technical data such as price and trading volume, technical analysis methods, and computer and Qianlong software technologies. The popularity of analysis tools makes the application of this method increasingly common.
The technical analysis method generally organically combines stock selection and buying, and the stock selection process is also a process of determining the buying timing.
One. Looking for a real bottom, capturing potential dark horses using the MACD indicator to select stocks that have experienced deep declines and long-term sideways stocks. At the same time, with the extreme shrinkage in trading volume, the stock price has started to rise slightly, and the MACD indicator has crossed the zero axis. At this time is not the time to intervene, you should also wait patiently for the stock price to pull back, wait for the MACD indicator to return below the zero axis, and then observe whether the stock price hit a new low. Under the premise that the stock price does not hit a new low, the stock price rises again, and when the MACD indicator crosses the zero axis again, the stock is selected, and this is the best time to buy.
Stock selection principles:
(1) Deep drawdown: The stock price has fallen from the previous historical high. For high-quality stocks, it has fallen by about 30%; for general stocks, the stock price has been halved; for inferior stocks, its stock price must be cut by 2 / 3 can be described as a deep fall. The research on the texture of the stock must be combined here. For example, for high-growth performance stocks, it is not easy to drop 1/3, and for ST stocks that are only delisted, it is normal to drop 2/3. There is no absolute here. standard. Therefore, the decline of a stock must be viewed dialectically. When investors are not sure about this, it is recommended to focus on the stock whose share price has fallen by 2/3.
(2) Long-term shrinking sideways: Generally speaking, after the control agency completes the shipping process, if the stock price does not have a deep correction, it will be difficult to increase again, so of course it cannot attract new admission. Only after the long-term sideways movement of the stock price has the medium-term and long-term moving averages such as the 60th, 80th, and 120th been basically flattened from a downward trend, that is, the downward trend of the stock price has changed, and the average holding cost of long-term investors has become consistent. Only then was the stock price attractive to the new bulls. The long-term sideways trading should be accompanied by an extremely shrinking trading volume. If a large trading volume is still maintained, it means that the short-selling energy is still strong and the upward momentum is insufficient.
(3) MACD does not move when it crosses the zero axis for the first time: after the stock price has fallen sharply, the first wave of market prices is likely to be the unraveling market of the quilt institution. Even in the case of a new long position opening, in most cases there is still a cruel process of dishwashing. Therefore, the MACD indicator crosses the zero axis for the first time is not the best buying point. (MACD takes the normal indicator here)
(4) The stock price no longer hits a new low: from a trend perspective, the sequential downward movement of stock prices means that the entire downward wave has not ended. Finding the bottom in a downward trend is a very unwise behavior, so the stock price is no longer Innovative low is an important principle to ensure that investors only operate in an uptrend. On this basis, with the rise of the stock price, MACD crosses the zero axis again, and another wave of rising waves has begun before it can be initially confirmed that it has reached the midline to build a good opportunity.
After using the above principles to select and buy potential stocks, if the stock price does not rise and fall, MACD returns to the zero axis again. You should pay close attention to the trend of the stock price. Once the stock price reaches a new low, it indicates that the downward trend is not over, and you should firmly stop losing. Otherwise, it should be regarded as repeated dishwashing.
Example: Dragon Boat (600711), (see Figure 4.), after the peak of 18.72 yuan in late July 1997,
It fell below 7 yuan in two months, and the stock price dropped almost two-thirds. After this typical "deep fall",
The stock bottomed with the broader Shanghai market on September 23 and began a three-month bottoming phase. During this period, the stock price fluctuated within a narrow range, and the transaction volume was sluggish. The single-day trading volume on December 3 was only 46,000 shares, which was equivalent to 1/10 of the single-day maximum trading volume of 4.13 million shares at the peak of the market. Necessary conditions; at the same time, the stock price is always above 6.5 yuan, and there is no new bottom. At the end of December, the stock price of Longpan began to change.First, the trading volume was moderately enlarged.
Every other month there is a process of rapid increase in volume. The MACD indicator crosses the zero axis for the first time after 5 months below the zero axis. The medium and long-term moving averages such as 60, 80, and 120 days have basically flattened, indicating that the cost of holding stocks of medium and long-term investors is close, and there is no killing momentum. There are new multiple entries to collect the bottom chips. The subsequent dishwashing behavior caused the MACD indicator to return below the zero axis, but when the stock price reached the 1/2 position, it was unable to fall under the support of multiple mid-to-long-term moving average crossing bands such as the 60th, 80th, and 120th days, and it began to renew. Picking up the momentum, the MACD indicator crossed the zero axis for the second time, at this time has reached the best buying point. Even if there is still a large-scale dishwashing behavior, the three medium-term and long-term moving averages have started to rise, indicating that the trend of the stock price in the later period has become a medium-term uptrend in which the stock price has risen slightly.
two. Find strong stocks starting from the bottom 1. After using ROC indicators to select stocks that have been trading sideways for a long period of time, the stock price accelerated for the first time after it began to enter an upward trend.
This makes the ROC indicator in the normal state for the first time appear three antennas above the zero axis, showing that the stock is very dark horse, and can intervene when the callback.
The key to stock selection:
(1) Starting at the bottom area: First, it is determined from the above that the stock price is in the bottom area. (ROC takes normal value)
(2) Stock price rapidly rises: An important function of the rate of change of ROC is that it has a good performance in measuring extreme market conditions. With the rapid rise of the stock price in the early stage of the rise, the ROC indicator crossed the three antennas in succession, showing that the institution has shown signs of opening up positions. Emphasizing that this situation needs to occur for the first time is to ensure that the stock price is still near the bottom area.
(3) Scope of application: This method is not applicable to super large-cap stocks and newly listed stocks. The ROC indicator is connected to three antennas, and the general stock price has risen by 50%. It is already very risky for super large-cap stocks, and there is little room for rise. However, the market positioning of newly-listed new shares has not yet stood the test of time, and the use of this indicator is not reasonable.
The above-mentioned ROC indicator under normal conditions means that the startup interface is not enlarged or reduced in Qianlong's dynamics.
So as not to cause a change in the value of the third antenna and fail to achieve a uniform standard.