The Value Of Investment In China Effectiveness Study

With the stock split share issues smooth settlement and the continuous progress of other concurrent reform, securities market developed steadily in the course of procedure standardization, the market's investment philosophy has undergone great changes. The irrational speculation of the past is bound to quit the stage of history, on the other hand, the value investment concept with the intrinsic value and the margin of safety will be a sought after investment philosophy. The bull market from 2005 to 2007 had made the value investment slowly filtering into people's minds. However, after the big bear market in 2008, the individual shares is almost annihilated in Chinese stock market, even the value of stocks with value-oriented investment strategy were not spared, The value investment philosophy has been doubt by investors. In the context, the paper attempt to have a study to the adaptability of value investment in securities markets.The core of value investment theory is value investment philosophy, it means that the market price of stock is always fluctuated around and often deviated from its intrinsic value. Consequently, the investor should wait for the market peak to sell and bottom to buy. On the basis of summarizing documents of some famed investors, the paper put forth the concept of sub-class diagram of value investment, which been explained and described in the view of economics and finance. Then the value of investments described in detail the theory of valuation indicators and literature, explains the significance of selected indicators of relative valuation.Based on the theoretical study, this article based on four indicators respectively, from low to high, in accordance with the order from low to high, on A- share companies in 2006 to 2008 carried out a valuation order. Make statistical analysis to underestimate the value of these stock market performances the following year. Analysis showed the use of valuation indicators achieve significantly over the market return in china. In the meantime showed, Combination of several valuation index stock selection strategy has a more obvious effect, proved the effectiveness of our investment in market value. On the other hand, this article will be market rate of return in recent years, the 100 stocks with the highest trade value compared the results found that these stocks also have relatively low valuation of the characteristics of indicators. This indirectly proves the effectiveness of value investing.There have some innovation of this article as following: Firstly, the value of proposed investment in the concept of sub-class diagram, and from various angles on the value of investment sub-class diagram for the explanation and illustration. Secondly, four indicators of relative valuation, and the contrast between the combined case, both qualitative and quantitative point of view of the strength of these indicators of effectiveness. Thirdly, the actual analysis, we found a high rate of return the market valuation of stocks also have lower values than all the characteristics of the industry, this is also in the previous literature rarely mentioned.