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China's Stock Market Behavior, Financial And Investment Strategy Research

Posted on:2004-04-13Degree:MasterType:Thesis
Country:ChinaCandidate:C WuFull Text:PDF
Abstract/Summary:PDF Full Text Request
The "Rational People" hypothesis and the mechanism of "Market Choice" in the traditional finance theories have been being doubted by many economists. Many anomalies and a lot of practical studies show that there are some unreasonable factors in the hypothesis and the mechanism.Behavioral finance theory has made up the defect of the traditional finance theories. In Behavioral finance theory the investors in the security market are "Bounded Rational People", whose irrational behaviors can, less or more, easily to cause behavioral deflections. The investors' systematic behavioral deflections and demagogue behavioral deflections will cause the over-reaction and under-reaction of the securities' price, on the base of which the active investment strategies appear. Also, in realizing their behavioral deflections, the investors can control their behaviors to avoid the risks in the security market, on the base of which the passive investment strategies appear.The behaviors of the investors in China's security market are particular. Because of the investors' deformational structure and many other reasons in deep lever such as "policy Market" and so on, the serious excessively speculative behavior and the obvious herd behavior lie in the security market in China. Furthermore, the personal investors and the institutional investors have their own particular behavioral deflections.On the base of the analysis of the security market efficiency hi our country, the long -term contrarian investment strategy and the middle-term momentom trading strategy are tested in this market. The result shows that long-term contrarian investment strategy can create excess earnings for the investors. Two investment strategies: the "Lifting the Banker" strategy and the "Cost averaging" strategy are recommended to the personal investors.
Keywords/Search Tags:Bounded ration, Behavioral deflection, Over-reaction, Under-reaction, Active investment strategy, Passive investment strategy, Momentom trading strategy, Contrarian investment strategy
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