An Empirical Analysis Of Brokerage Firms' Stock Market Trend Prediction

Although China's stock market has experienced rapid development for more than 20 years,it is still dominated by individual investors.Most retail investors mainly focus on short-term investment.Their decision-making path is often based on the judgment of broad stock market,and then the individual share decision-making.Lacking professional knowledge and investment analysis technology,the majority of retail investors always judge the market trend depending on the analysis of the brokerage.Therefore,the stock market predictions of the brokerage have a large influence on the individual investors' investment decisions.However,how plausible are the brokerage forecasts?Can they really guide investors?Are there any differences between different grades of brokerage on the forecast reliability?On these issues,few domestic scholars conduct a systematic study,which makes the forecasting value of securities greatly doubted by retail investors.Based on this,this research takes the market trend prediction of the securities as the research object.First of all,we make a systematic study of relevant theories;and then we construct the prediction error measuring method,the error criterion and the Friendly Index.On these bases,we select different securities' forecasting data on the market trend and the actual market index data from 2011 to 2015 as analytical samples.This paper uses the statistical software EXCEL,SPSS 19.0 and Eviews8.0 to do the comparative analysis.Finally,we explore the reasons for the predicting error combining the relevant theory to provide necessary guidance for the retail investors making rational investment decisions.The main conclusions of this study are:(1)Brokerages' market trend interval prediction error was large,and the predictions of market trend are inaccurate.Therefore the retail investors cannot judge the future trend simply according to the brokerages' prediction results'(2)There is a striking difference between different grades of brokerage.Among them,the prediction error of C class broker is significantly lower than the class A and class B brokerage.Therefore,the lower grade brokerages'forecasting conclusions are more valuable for the retail investors;(3)There is a significant difference in different market environment,and the security firms' prediction error is smaller and more optimistic in the bear market;(4)If brokerages have highly consistency on the market trend,the retail investors had better do the reverse operation.The innovations of this research are in two aspects:on the one hand,the research content of the brokerage on the market trend forecasting fills the gaps of the domestic research on the market trend interval's prediction error to some extent;on the other hand,this paper selects systematic and comprehensive sample data to compare the market trend prediction error between different brokerage grades,which makes the research results more pertinent and time-effecting.