Research Of Relative Valuation Model Based On The Growth

The core idea of the value investment theory is "to look for undervalued stocks and hold themin the long term". The theory developed for nearly a century has been recognized and applied bymany investors. After20years of development, the concept of the value investing in China's stockmarket has been implanted in people's minds, but how to assess the value to invest causes a lot ofcontroversy. Currently, there are still many investors, especially small investors don't pay attentionto the value investing to speculate or blindly obey the idea of others. In view of this, the paper sumsup value investment theories, comprehensively compares and analyses the methods of valueinvestment methods, trying to proposed a more effective investment strategy based on developingrelative valuation method, that is the developing relative valuation approach to find undervaluedstocks and invest in the appropriate period, with moderate portfolio.This paper carry on the analysis of applicability of the growth model of the relative valuationin the short, mid, and long term. Based on the rate of average cumulative excess,the differentinvestment effect is analysed with apply to descriptive statistics. The results show that PEG havethe better effect than PE all the time; in the certain condition, PBG\PSG have the respective betterdecision effect than PB\PS.The paper further analyses the effect of investment based on the model of the developingrelative value and traditional model. Results showed that,PEG tradegy could have the best effectholding5of stocks in period of2year; PBG tradegy could have the best effect holding3of stocksin period of4year; PSG tradegy could have the best effect holding8of stocks in period of2year.Comprehensive analysis is that,the combination of PBG holding4year and3stocks isthe short-term, medium-term and long-term best one.