Introduction to the basics of eight equity investments, equity risk

 Eight, the purchasing power of the stock risk
macroeconomic exchange rate risk Interest rate risk risk risk society, political risk
operational risk market risk, financial risk operational risk liquidity risk
risk of price changes, interest rate risk business risk factors the market itself decentralized system of subjective factors
investor risk aversion against operational risk market risk to avoid interest rate risk to avoid the risk of the purchasing power of distributed systems
risk prevention risk averse market risk management to avoid the risk of interest rate risk to avoid purchasing power
1. purchasing power risk < br> purchasing power risk, also known as inflation risk, is due to inflation, real rate of return to investors caused by the uncertainty. stock market is the direct financing of enterprises and investors in place, and thus the total supply of social currency of a decision to fund securities impact of market supply and demand situation and an important factor in the price level of securities, when excessive money supply growth capital, inflation, the stock price will follow to change. inflation on stock prices, there are two distinct effects. In the beginning of inflation, companies, corporate real estate, machinery and equipment and other fixed assets, book value due to inflation rising, stock prices can not only sold for the enterprise, but also allows businesses to purchase low-cost raw materials from the past were Lee, on behalf of nominal capital gains and an increase in earnings, will naturally make the company, corporate stock market prices. Meanwhile, the feeling that inflation is likely to aggravate the people will rush to buy stocks to hedge against inflation, to stimulate short-term rise in stock prices. However, when inflation continues After a period of rising, and it will make the stock price trend reversal, and negative benefits to investors, companies, business assets revealed a false value, the new cost of production due to the rising prices of raw materials increased, a corresponding reduction in corporate profits and investment began to throw the stock and instead look for other financial assets should be preserved the way, all of which will make the stock market, shrinking demand, supply exceeds demand, stock prices will naturally dropped significantly. serious inflation will enable investors to hold stock depreciation of the currency by selling shares of income decline in real purchasing power.
2.
interest rate risk interest rate mentioned here is the bank's credit activities in the deposit and lending rates. As the interest rate is a process of economic operation important economic lever, it will frequently change, so will significant impact the stock market. In general, bank interest rates, stock prices fell, and vice versa. There are two main reasons: First, people hold The basic purpose of financial assets, is to obtain income, the same in return, they are willing to opt for safe financial instruments, in general, the safety of bank savings deposits is much higher than equities, so once the bank deposit interest rates, capital will flow from the stock market, so that the decline in the securities investment demand, stock prices, thereby reducing the investment rate of return; second, after the bank loan interest rates, monetary tightening credit markets, poor corporate liquidity, interest costs, production development and profitability will follow weakened, deteriorating financial situation of enterprises, resulting in stock market prices.
3.
currency exchange rate risk the relationship between investment risk of securities is mainly reflected in two aspects: First, their currencies in favor of imported raw materials, mainly engaged in production and operation of enterprises, export-oriented products is not conducive to business, so investors are optimistic the former, negative on the latter, which will lead to stock price fluctuations. devaluation of national currency the opposite effect; second currency is freely convertible for the countries, exchange rate movements may also cause the output and input of capital, thus affecting the domestic money supply and demand of funds and securities markets.
4.
macroeconomic macroeconomic risks economic risk was mainly due to changes in macroeconomic factors, changes in economic policy, business fluctuations and changes in international economic factors, stock investors may bring to unexpected gains or losses. macroeconomic factors will change in the operation of securities markets and operation of joint-stock enterprises have a major impact, such as the economic system transformation, enterprise reform, to join the World Trade Organization, the free convertibility of RMB, etc., has been true.
5. social and political stability risk
social, economic and political environment is the basic guarantee for the normal development of the securities investors are no exception. If the political situation in one country, major changes, such as a change of government, heads of state health problems, domestic unrest, foreign political relations crisis will reverberate in the stock market. In addition, politicians involved in securities speculation and insider trading the securities of a class of employees in the political, social scandal, will also pose a great threat to the stability of the securities market. like the 80's in Japan appears country risk , and its stock price in the domestic issue will be adversely affected, in other words, this country risk will be transferred to a large extent holders of common stock upon business.
6. Market risk Market risk
the stock holders of all the risks facing the most formidable one, it gives shareholders the consequences are sometimes disastrous. in the stock market, the market changing, and difficult to predict the direction of change and the market rate. incomes are rising in the company, its stock price has dropped, we can often see this situation; there are some companies, good business conditions, income is also very stable, their shares are in a very short period of time up and down volatility. occurrence of such abnormal phenomenon is mainly the general views of investors in the stock or stocks of certain species or a group due to changes in the view. Investors view the stock (mainly on Stock Returns expected) most of the changes caused by the volatility of common stock returns, known as market risk.
7.
financial risks and financial risks is the way the companies to raise funds. We usually observe a company by capital structure to assess the company's stock's financial risk. the capital structure of small proportion of loans and bonds of companies whose shares the financial risk is low; loans and bonds than the major companies, their stock of high financial risk. stock company only paid all debt interest and principal due after the payment of dividends to shareholders. the company's sales of products and services less the total income derived from salaries, depreciation, materials remaining after all operating expenses portion of the company's operating income . from operating income minus taxes and the necessary financial expenses, such as banks or other creditors to pay interest on the remaining part is the income available for dividend payments. Since this income is used to pay dividends, and for investment were judged on the impact of stock prices as much, so its size and the variable level of income in determining the rate of shareholders is very important. If a company's total capital raised through issuing shares, it does not interest payments. The For any method of financing by borrowing part of the funds of the company must pay the interest due, so the change in revenue will cause a greater net change in shareholders.
8.
operational risk refers to the business risk is due to the company external operating environment and conditions, and internal management problems caused by changes in revenue caused by the uncertain benefits of stock investors. the degree of business risk varies between companies, depending on the company's business activities, the income of some industries are easy to change, making it difficult to predict. As the company's earnings and cash flow is closely dependent on its income, the income will lead to volatile earnings and cash flow uncertainty. When a sudden drop in revenue, due to holders of ordinary shares When a person carrying the cash distribution at the bottom, they will suffer heavy losses. Compared with the company's bond holders, holders of common stock at a much riskier position. When the company looks bad, rapid income downturn, companies in the payment of debt interest and principal due after the proceeds available to pay dividends is running low, resulting in reduction of shareholders from dividends or no dividends, while the general stock market prices will decreased, so that shareholders have suffered a double loss.
9. Liquidity risk Liquidity risk is the risk
is due to the assets into cash difficulties caused by the potential benefits of uncertainty for investors. A stock prices do not make major concessions to the difficulties of selling the larger case, you own the stock the greater the degree of liquidity risk. Transaction on the market in circulation among the various stocks, liquidity risk vary widely, and some easy to dispose of the stock market transactions in the previous absorption of the same price level of the stock in bulk transactions. such as the U.S. General Motors, Exxon shares traded tens of thousands of hands each day, performance the great mobility, such stocks, investors can easily sell, the price does not cause any fluctuations. while others rush to stock investors, they realized, it is difficult sell, unless the pain or cheap , made great sacrifices on price. When investors no intention of a buyer's market will be realized when a stock will fall into the liquidity trap.
10.
operational risk in the same A stock market, deal with a company's stock, the result of different investors may appear very different situation, some profitable, some lose money, this difference is largely due to investors in different mental quality and psychological state, different criteria, due to different operating techniques. For these reasons, investors in investment income caused by the difference, called operational risk. operational risk is the most important psychological factors.
12.
price risk arising from changes in currency, also known as expansion risks, referring to the impact of price changes, changes in equity prices was a risk. There are two cases: one is some important items (such as electricity, coal, oil) price changes, thus affecting the cost of most products and return; the other is that the price indices. Generally speaking, when the price index, currency devaluation, people will buy bonds that disadvantage, caused bond prices to drop, 100 in 1988 Qianggou Feng face value when the Treasury to price of seventy to eighty dollars thrown, that is affected. But it is a store of value stocks, as a symbol of corporate assets, inflation will follow when the value of enterprise assets, therefore, often cause stock prices up. On the other hand, rising prices, especially coal, electricity, oil prices, to enable enterprises to increase the cost of investing in stocks can not avoid this time there will be risks. but in general, prices rise, bond prices fell, while the stock market will prosper.
13. the market itself the risk of a variety of factors which refers to the securities market itself
due to various factors causing the risk of stock price changes. rapidly changing stock market directly affects the supply and demand, including political unrest, tightening the money supply, government intervention in financial markets, the investing public mental fluctuations and other large speculators have stirred up trouble, can the stock market set off a storm of protest. Take the Shanghai stock market, in June 1991 prior to fatigue or weak shareholders Seeing their own hands did not increase the stock value of the stock but fall into the par below, no interest in the stock market, discouraging matter to; owners who face capital market continued on a downward trend, do not want to rush approach, resulting in less access to both, Jinguan listed stocks, but a few thousand yuan, is still an oversupply of .7 months later, under the influence of the foreign investors, coupled with major projects such as Pudong Development stimulant boosted the Shanghai stock market, a fundamental change in the mass psychology, tens of millions become much stock in short supply. of such abnormal abnormal cold-hot stock market, can say that most people are unexpected, as there are many causal factors can not be predicted. In other words, if investors invest in stocks in June, although prices low, they will still run the risk of many hard-expected, because of risk, profitable investment opportunities for people with high .6, to 10 months, the share price quadrupled.
14. business has
refers to the risk of listed companies because the industry competition, market demand, raw material supply, cost changes, and corporate performance management, and other factors, the risks posed. enterprise risk generally have three cases. The first business risk, where there is a market saturation on the poor sales of a product of factors, but also the impact of government industrial policy is a trade or industry is limited. For example, to combat pollution, polluting enterprises or so close, or the migration, or you must spend a great cost to pollution remediation, resulting in greatly decreased profits or even losses. The second is financial risk, refers to the poor financial situation of enterprises, including financial mismanagement, poor planning, the expansion of such negligence, resulting in unnecessary loss of business and capital losses. In case of an enterprise can still adjust the direction of operational risk, in case of financial risk, sometimes in its accounting report will use the financial data is not true to deceive shareholders and misled investors, the financial report when the sudden appearance of large non-operating income or very interest income, corporate profits seem to greatly increase, the need for special attention, which is likely to be an illusion, the investor must be treated with caution.
15. investors caused by subjective factors of wind
investment risk if the scope of influence is at risk can be divided into social and public risk and individual risk, the interest rate risk, price risk, market risk are the public risk, business risk is a particular risk. Similarly, as investors I have the risk of subjective factors, but also the list of individual risk, including the blind imitation, unnecessary panic, greed, miscalculation situation, missed trading opportunity, the same obsession as the stock market gamblers and so on. which is blindly follow the crowd and be greedy will be put to death the two common investor risk. blindly follow the trend is often linked with unnecessary panic, becoming the victim of speculators manipulate the market. some large speculators often take advantage of market psychology, the sizzling stock market, the stock lift high, so that investors think that profitable, hot pursuit up, you chase me up the stock price has been forced on the top; then rapidly down the price speculators again, I do not know to retail investors, in the psychology of fear, but also had to blindly follow, do not ask a matter of course, led by selling, so that stock prices fall even worse. that blindly follow the trend and encourage it because of the ups and downs often fall confusing for investors, speculators have been the major benefit from.
16. distributed operating system market risk
proverb: ; .60 end of the decade some studies that found that if the funds dispersed to many homes as well as any of a number of selected stocks, the total investment risk will be greatly reduced. They found that, for any of the 60 selected stocks If you have a temporary need of hands, but also not a big amount of cash, you can get to withstand the loss of their investment potential, you can choose those who would then invest in high-yield stocks; if you have is a large not a huge loss of cash, you'd better approach to diversification to reduce risk, even if the weather, also analysis, to learn about the cycle changes in the laws, understand the benefits of sustained growth in capacity. such as car manufacturing industry, in the social economy is prosperous, its profits are guaranteed, cars consumers will be greatly reduced, this period generally can not easily buy its stock. Second, with cyclical stocks. Some companies limited by its own operations, the year there is always a period of time production downtime, and its stock price during this time most of them will fall, in order to avoid fell due to damage caused can be a strategic acquisition of other low-start, the stock suspension is just the opposite combination with each other to make up for the fall in stock prices may result in the loss. Third, select the trading opportunity. to the historical data of stock price changes basis, calculate the standard error, and as a trading opportunity in the general election is the standard, when the stock price lower than the standard deviation under the limit, you can buy the stock, when the stock price higher than the standard error of the limit, it is best to sell the stock on hand. Fourth, note that investment period. enterprises operating conditions often showed a certain periodicity, the economic climate is good, the stock trading activity; economic climate is bad, the stock market transaction must wither.
18. guard against operational risks in the purchase
stock before a careful analysis of the investment object, that a company or a company's financial reports, studies, as well as its current business position in the competition and previous earnings trend. If we can maintain a sustained growth in earnings, a practical development plan business objects as a stock investment, and poor operating conditions of those companies or investment companies to maintain a certain distance, you can better guard against operational risks. if in-depth analysis on the company's operating business or material, not as a surface phenomenon action, see its flaws and potential problems and make calm judgments, you can completely avoid business risks.
19.
avoid the risk of inflation the purchasing power of the period, should be aware that the market price rises high goods, such goods from the production enterprises in selected high profit level and ability of enterprises. When abnormally high rate of inflation, should be to preserve as the most important factor in preserving and increasing the product if they can buy the stock (such as gold mining company gold and silver stock manufacturing companies), you can avoid the risk of inflation, the purchasing power brought about.
20. to avoid interest rate risk
try to understand the business working capital ratio of ingredients in its own interest rate rises, Borrower will cause more businesses or companies more difficult to bring disaster to the stock price, interest rate movements on those borrowings less, its own funds by the company more businesses have little effect. Thus, the interest rates trend higher, generally less borrowing to buy or not to buy more corporate stock, subtle changes in interest rate volatility, should give priority to those who own capital to buy more shares in the company, so you can basically avoid the interest rate risk.