Chinese Individual Investors At This Stage Portfolio Optimization

As Chinese rapid economic development, Personal residents' income continued to improve, the investment desire of them is growing more and more strongly. For investors including individuals, capital market establishment and development had provided the place of storing and adding them wealth value. On the whole, individual investors will benefit from the development of the capital markets, gaining in them wealth through investment products. The history of China' s capital market is not a long time, being not ripe for the development of the market, and individual investors' investment status is not yet satisfactory, so a series of problems about portfolio choice and optimization are brought to individual investors.Markowitz in 1952 published "Portfolio Selection" papers, which applied firstly mathematical system of linear programming to the securities portfolio problems, and analyzed the yield and risk of investment besides numerical relationship between them, thereby he established the basic framework of mean - variance model, and laid the foundation for Modern Portfolio Theory. Since then, the theory was gradually investigated or applied in extensive domain of theory and practice.This text, starting from the theoretical analysis, discussed Modern Portfolio Theory and the application of it in Chinese capital market from far to near. The investigation on the investment behavior of Chinese individual investors appears that it is necessary to rationally guide their investment. The large collection of Chinese capital markets' performance (such as high Turnover Rate) appears that the investment risks are quite prominent, and the investment decision of individual investors is made more difficult. The restrictions on the application of Modern Portfolio Theory in Chinese capital market appear that the important role in risk diversification isn' t fully or effectively played. Therefore, individual investors need to further optimize their portfolio so as to promote long-term and stable investment yield. Gradually on the rise of various investment varieties in recent years the range of the original investment varieties provided by Chinese capital market is broken through, and when bringing them into the individual investment portfolio, a new choice of the investment portfolio optimization will be gained.After studying in theory the Chinese individual portfolio' s choice and optimization of today, Chinese investment in stock and real estate was chosen to make a further empirical study, which discussed the effects of its risk diversification, and had attained the most optimal portfolio, additionally the empirical analysis in view of a risk-free asset was put up to avoid the system risk in course of investment. Finally, the conclusion was drawn about the study of the portfolio choice and optimization for the Chinese individual investors, and the guiding investment recommendations were put forward.In a word, it can be to a great extent realized to achieve the goal of promoting rational investment through the choice and optimization of portfolio by Modern Portfolio Theory for the Chinese individual investors.