Analysis On Stock Market Investment Strategy Basing On Herding Theroy

As one common phenomenon in stock market, it has great influence on single stock and the whole market. Especially for the institutional investors, their herding behaviors have stronger effect and more important research significance because of their huge capital scale.This article just takes Stock-Funds as the research objective of the empirical study, which is one of the major parts of the institutional investors. This article focuses the period from third quarter in 2006 to second quarter in 2008. The main reason is many great changes took place in several aspects of our stock market during this course.Firstly, this article makes an empirical study on the degree of the herding behavior among our Stock-Funds and analyzes the extents of the fake herding behavior and the true one respectively. Then it analyzes how the influences coming from above herding behaviors affect the price changes of the according stocks from a qualitative point of view. The empirical study results show there are serious herding behaviors in those funds and this kind of behavior has clear effect of the stocks'price.Secondly, this article makes a research on the relationship between funds'herding behaviors and the cyclical change of stock market. Because the Funds'major holding stocks are always stocks which have strong weight in the market, the influence from the fund's herding behaviors can affect the whole market through the price changes of these stocks. This article selects some stocks in accordance with certain standards to build one group and makes one study of the cyclical change of the whole stock market based on some indexes of this group. The research results show these indexes have strong correlation with the change. At last, this article uses these indexes to deduce the change and gets good result.Finally, basing on the above two empirical studies, this article advance according investment strategies. And the strategies are divided into two levels: the strategic level and tactical level. The former is mainly used to judge the whole market's tendency by analyzing the price change of Funds'major stocks group and the Funds'holding data disclosed in their quarterly bulletins; the latter decides the detail investment aim and time of the investing actions by the preferences of the funds.