Research On Stock Industry Selection And Configuration Based On Business Cycle

In recent years, with China’s rapid economic development, people’s income has become more andmore and they have started to invest in the stock market. Stock index continuously changed with theups and downs of the macroeconomic situation; because of many investors’ lacking of understandingon the stock investment, they only pursued earnings, blindly chose stocks and eventually suffered loss.At present, a large number of scholars have respectively done in-depth research on bussiness cycle,industry choosing of stock investment and investment portfolio; but studies on combining these threeaspects together to systematically choose stock investment portfolio are few. So this paper hassystematically studied on these three aspects and developed a valuable stock investment portfolioselection strategy.Based on previous theoretical studies, according to the actual situation of China’s macroeconomicand stock market, the thesis combines qualitative and quantitative analysis method, builds a model todivide bussiness cycle, analyzes optional industries of bussiness cycle’s each stage and builds stockinvestment portfolio selection model.First, starting from China’s macro-economic reality, according to Merrill Lynch Investment Clocktheory, selected three indexes like inflation, money supply and GDP growth, got the method of usingthese three indexes to divide macro-bussiness cycle and its four stages like recession, recovery,overheat and stagflation, and divided China’s macro-economic and its four stages during the periodfrom February2002to June2011. Then analyzed the optional industry of each stage and got industryselection model of bussiness cycle. The model is a pure theory model.Next, according to the industry classification of China Securities Index, tested the yield of the25secondary industries during the period from February2002to June2011and selected the optionalindustry of each stage. The result is consistent with the result of theory analysis.Finally, analyzed a variety of restrictions and constraints of China’s stock market, madeimprovement to Markowits’s M-V Model, got the investment portfolio selection model and used it toselect stocks. Empirical studies shows that the new model is not only effective, but also can reduce therisk and get a certain return.