Analysis Of Stock Investment Strategy Based On Relative Valuation Method

The core idea of the value investment theory is"to look for undervalued stocks and hold them in the long term". In nearly a century the theory has been recognized and respected by many investors. China's stock market has experienced nearly 20 years of development, value investment philosophy has been accepted by some investors, however, there are still many investors, especially medium and small investors are not focusing on value investing, blindly following the trend and speculating. In view of this, the paper sums up value investment theories, comprehensively compares and analyses the methods of value investment methods, trying to proposed a investment strategy based on relative valuation method, that is the relative valuation approach to find undervalued stocks and invest in the appropriate period, with moderate portfolio.This paper on the relative valuation of different methods of application of its decision-making effect of the empirical analysis and test On the one hand, verified by multiple linear regression model and relative stock investment returns were a negative correlation between the valuation indexes. On the other hand, low PE ratio portfolio, combined with low book value and market sales ratio portfolios with low yields an empirical analysis and comparison, results showed that the rate of PE strategy and city marketing strategies are available to more than the market average rate of return, especially the price-earnings ratio Strategic Investment better, but the book value strategies perform worse.Further analysis paper based on the relative value of the investment strategy the method of valuation in the investment period and the issue of ownership concentration, based on the abnormal returns, using descriptive statistics on the effects of different investment decisions are compared, results showed that, regardless of is the price-earnings ratio strategy or sales ratio strategy, holding five or so years of the best stock investment; focus investment earnings ratio and sales ratio have a low stock, can get higher investment returns, but risk larger.