Locke's theory holds that every investment tool, whether common stock or real estate, has a solid pillar called "intrinsic & # 1 18 value". "Intrinsic value" can be obtained by carefully analyzing the present situation and future prospects. When the market price is lower (or higher) than the intrinsic value rock, the opportunity to buy (or sell) will appear, because the fluctuation will eventually be corrected-this is the core of the theory. Therefore, investment becomes a boring and direct behavior, and you only need to compare the real price with the rock value.
It is difficult to attribute the credit for the establishment of rock theory to any individual. Although we often give this honor to S now? Eliot strange (s? Eliot's guild), but it's John B. William (John b? Williams).
In "Investment Theory & # 1 18 Value", William proposed a real formula to calculate the intrinsic value of stocks based on dividend income. In order to avoid oversimplification, William cleverly played the second trick and introduced the concept of "discount" in the calculation process. The meaning of discount is actually to look at the income in reverse. For example, don't look at how much money you will have after one year (deposit a dollar in the bank with an interest rate of 5%, and it will be 1 after one year? 05 dollars), but to see how much money is now in the future (that is, a dollar a year later is only worth 95 cents now; If you invest 95 cents now and the return on investment is 5%, you can get about one dollar a year later.
William is very keen on this concept. He went on to suggest that the true value of a stock is equal to the present value (discounted value) of all future dividends of the stock. Therefore, investors are advised to "discount" the money received in the future. However, the word "discount" became popular because few people really understood it at that time. Nowadays, it has become a popular language for investors. With the support of Professor irving fisher, an outstanding economist and investor of Yale University, its status has been further promoted.
The reasoning method of rock theory is very reasonable, and it is the most appropriate to explain the value of common stock. This theory emphasizes that the value of stocks should be based on the profit flow that the company can use for dividend distribution in the future. This means that the more dividends a stock has now, the higher the dividend growth rate and the higher its value. Therefore, the difference in growth rate has become an important factor in stock valuation. Now, vague and trivial future expectations are mixed. Securities analysts should not only estimate the long-term growth rate, but also estimate how long the extraordinary growth can last. If the market is too keen on the duration of future growth, Wall Street will discount not only the future but even the afterlife when analyzing stocks. Rock theory relies on some tricky predictions about the future growth degree and duration, which is the key point. So the foundation of intrinsic value may not be as reliable as the theory claims.
Rock theory has not been confined to economic academia. Because of Benjamin Graham and David Dodd's famous book "Securities Analysis", a whole generation of securities analysts on Wall Street have converted to this theory. The prudent investment management that the practicing analysts have learned is very simple, that is, buying when the price of securities is temporarily lower than the intrinsic value and selling when the price of securities is sufficiently higher than the intrinsic value. Moreover, there are more and more computer instructions to determine the intrinsic value, and any capable securities analyst can quickly calculate its value by tapping the computer a few times. Benjamin? Graham and David. Perhaps Warren is the proudest successor of Todd's method? Warren Buffett. This shrewd investor from the Midwest of the United States, known as the "Sage of Omaha", has created a legendary investment record. He followed the rock theory.
Castle in the air theory
Castle in the air theory focuses on psychological value. 1936 john maynard keynes, a famous economist and successful investor, explained this theory clearly for the first time. In his view, professional investors don't like to put all their energy into estimating "intrinsic value", but are more willing to analyze the possible behavior patterns of mass investors in the future and how to build their hopes into castles in the air in optimistic times. Successful investors always judge the investment situation that is most likely to be built by the public in advance, and then buy stocks first.
Keynes believed that the rock theory involved too much work and the value results were doubtful. He put the investment theory he preached into practice and got rich returns. When London financiers were buried in noisy offices, Keynes only traded in bed for half an hour every morning. This "leisurely" investment method has earned him millions of pounds; The market value of his endowment fund at King's College, Cambridge University has also increased nine times.
Keynes rose to fame during the Great Depression, when most people paid attention to his idea of stimulating the economy. There is no doubt that it is difficult for anyone to build castles in the air or predict other people's dreams. However, Keynes devoted a whole chapter to introducing the importance of the stock market and investors' expectations in his book General Theory of Employment, Interest and Money.
Regarding stocks, Keynes pointed out that no one can know exactly the factors that affect future earnings prospects and dividend payment. Therefore, he believes that "most people are not concerned about making an ultra-long-term prediction of the possible income of the investment target enterprise in the whole life cycle, but predicting the changes in the traditional valuation basis slightly before the public". In other words, Keynes applied psychological principles rather than financial valuation to the study of the stock market. He wrote: "If you think that an investment is priced at $30 based on its expected return, but at the same time you think that the market price of this investment will be $20 in three months, then it is unwise for you to invest $25 in this investment now."
When Keynes described the skills of participating in the stock market, he used a metaphor that was easily understood by his British compatriots: in the "beauty contest" held by the newspaper, the contestants had to choose six of the most beautiful faces from 100 photos, and whoever chose the one that best met the overall judgment of the contest would win the prize.
Smart contestants realize that in the process of deciding the winner, personal aesthetic standards are irrelevant. If you want to win, a better strategy is to choose faces that other players might like. This logic often produces snowball effect, after all, other contestants also have keen perception. Therefore, the best strategy becomes to predict the results of mutual estimation, rather than picking the face that the individual thinks is the most beautiful or the face that other contestants may like. This is the skill of the British "beauty contest".
The analogy of newspaper competition clearly shows the basic form of theoretical price determination of castles in the air. The buyer thinks that an investment is worthwhile because he expects to sell it to others at a higher price. In other words, investment supports prices with its own driving force. New buyers always expect future buyers to pay a higher price for their investment.
In such a world, a fool will be born every minute, and his existence is to buy your investment at a price higher than your investment. As long as someone is willing to buy it, any price is not high. There is no other reason, that is, public psychology. All wise investors had to run away, and it was at the beginning of the game. So this theory is a bit "stupid". As long as you can find an ignorant guy who is willing to pay five times the real price for something in the future, then it is completely correct for you to buy something at three times the real price now.
The theory of castles in the air has a large number of supporters in both financial and academic circles. In his best-selling book Irrational Prosperity, Robert Shiller believes that the upsurge of Internet stocks and high-tech stocks in the late 1990s can only be explained from the perspective of mass psychology. 2/kloc-0 At the beginning of the 20th century, the theory of stock market behavior, which emphasizes herd mentality, has entered universities and been favored by first-class economics departments and business schools in developed countries. In 2002, the Nobel Prize in Economics was also awarded to psychologist Daniel Kahneman in recognition of his outstanding contribution in the field of behavioral finance. Earlier, oskar morgenstern was the main advocate of this theory. His views expressed in the book Game Theory and Economic Behavior, which he co-authored, not only have a great impact on economic theory, but also have a far-reaching impact on national security decision-making and enterprise strategic planning. 1970, he and his colleague Clifford? Clive granger pointed out in his book "Stock Market Price Forecast" that exploring the intrinsic value of stocks is tantamount to fishing for the moon in water. In the exchange economy, the value of any asset depends on the real or expected specific transaction. Morgenstein once carved such a Latin motto on his desk, which he felt was also the principle that every investor should follow:
Do you think quantum has potential?
The value depends entirely on the price that others are willing to pay.