Research On Value Investing Strategy Of A-share Based On Financial Indicators

Value investing,was first proposed by Graham and Dodd in the book named Securities Analysis in 1934.Value investing is a way of securities investment and an application of industrial investment thought in the stock market.After decades of development,the concept of value investing has been proved to be of great significance in the mature capital market.On November 26.1990,the State Council authorized the People's Bank of China to establish the Shanghai Stock Exchange,which marked the formal start of China's A-share market.After nearly 30 years of development,A-share market has developed from only less than 10 stocks to nearly 4,000 stocks,and the total market value is nearly 60 trillion.Many people think that in the current market environment,value investing is not applicable in A share market.However,with the strengthening of supervision,the improvement of legal system and the increasing demand for information disclosure,the standardization of A-share is becoming stronger and stronger.At present,the external environment for value investment is slowly taking shape.At the same time,some professional scholars have verified the feasibility of value investment in A-share market.At present,the total accounts of Shanghai and Shenzhen is nearly 200 million.A-share market has a large number of investors,but due to the lack of investor expertise and effective investment strategies,most of them are in a loss state,and few of them can sustain profits.Therefore,investors need a simple,effective and easy-to-understand stock selection strategy to maximize positive returns in a bad market.Firstly,this paper introduces the research status of value investing at home and abroad,and expounds several popular value investing concepts.Then it introduces the theoretical basis of value investing and the theoretical basis of index selection,which provides theoretical support for value investing.In the empirical research part,this paper chooses linear regression model to analyze the dependence relationship between dependent variables and independent variables.After determining the time interval of the study,taking profitability and growth as the basis of whether a company has investment value,and quantifying the selection criteria of financial indicators,427 listed companies are preliminarily selected as samples,and then three factors are screened out from 16 independent variables financial indicators.Multiple linear regression analysis is used to study the quantitative dependence between dependent variables(stock price change ratio)and multiple independent variables(P/Eratio,P/B ratio and dividend ratio),and to calculate and verify the return by analogy.Finally,obtain a three-indicator stock selection strategy with better earnings performance than the market.It is hoped that this method can provide a new,simple and effective stock selection idea for the vast number of individual investors.