Under the premise of capital preservation, what are the most profitable ways of investment and financial management? Those investors who
try to get this kind of yield by simply buying products have suffered heavy losses in the past two to three years. There is a saying to describe this: “tuhao died in trust, the middle class died in stocks, and diaosi died in P2P.”.
So we must understand a truth: investment is a very professional thing, if you want high returns, you need professional means and skills. It’s very dangerous for
us ordinary people to drive 150 miles on the highway, but it’s very easy for F1 drivers to drive more than 250 miles on the track. It is a dangerous way
for ordinary people, but in the eyes of these professional players, it is just an ordinary result.
Investment is the same reason, more than 10% of the income, ordinary investors want to do, in fact, it is very difficult, but professionals do this, it is not difficult, but we must use more strategic combinations, more professional investment tools, more effective analysis methods.
Here are some ideas and logic to popularize these professional investments. The
first concept to be introduced is called “beta”. Beta is a statistical concept, which reflects the performance of an investment object relative to the market. The larger the
absolute value is, the larger the change range of the return is relative to the market; the smaller the absolute value is, the smaller the change range is relative to the market.
Generally speaking, it is the ratio between you and the average line. For example, if the index rises by 10%, your stock will also rise by 10%; if the index falls by 10%, your stock will also fall by 10%. The beta of your stock is 1. What
if the beta is 1.1?
That means if the index goes up 10%, your stock will go up 11%; if the index goes down 10%, your stock will go down 11%, which means your stock is more volatile than index.
If the beta is 0.9, that is, if the index rises by 10%, your stock will rise by 9%; if the index falls by 10%, your stock will fall by 9%, that is, your stock will fluctuate less than index.
In general, a beta less than 0.5 is a low-risk stock, a beta greater than 1.5 is a high-risk stock, and most stocks have betas between 0.5 and 1.5.
The Beta coefficient originated from the Capital Asset Pricing Model (CAPM), which was founded by William Sharp, who shared the Nobel Prize in Economics in 1990 with his teacher Markowitz.
In the eyes of professional institutional investors, beta is used to describe the risk measurement of the stock market.
We know that the return of investment comes from the risk premium, so if you want to get a higher return, you need to make a high beta stock or fund portfolio. For example, in the long run, the beta coefficient of small-cap stocks relative to the market is larger, so the excess return is higher. Of course, if you buy wrong, the proportion of loss is also larger. The same is true in the field of
funds, taking China’s public funds as an example, the beta coefficient of Shenzhen Fund Index is larger than that of Shanghai Fund Index, but its long-term yield is also higher.
So for investors trying to seek a 10% annualized rate of return, they should not focus on blue-chip stocks and large-cap index funds, but on small-cap stocks and small-cap funds, as well as industry index funds.
The second concept is called “leverage.” When it comes to leverage, everyone is most familiar with buying a house on mortgage. You only need to pay about 20% of the down payment, and the rest is repaid through bank mortgage. Real estate speculators who have used this method in the past 15 years have made a lot of profits from it.
In the financial market, there are also many ways of leverage, mainly as follows: The first way is called: margin trading. Margin trading is that investors borrow funds from securities companies to buy securities with funds or securities as pledge, and repay the principal and interest of the loan within the agreed period. Popularly speaking, it is to borrow money from securities companies to speculate in stocks.
If it is a bull market, the use of financing can enlarge the size of their positions, can earn more; but if the wrong direction, the loss will be magnified. In the stock market crash in
2015, many big investors who financed to buy stocks lost all their principal, which is the reason.
At present, the financing leverage provided by domestic securities firms is about 1-2 times. A futures
contract is a standardized contract formulated by a futures exchange to deliver a certain quantity and quality of goods at a specific time and place in the future.
For example, on a certain day of the big month as the delivery day, if it is a long position, it needs to buy a certain amount of soybeans on this day according to the agreement, and if it is a short position, it needs to deliver a certain amount of soybeans on this day according to the agreement.
Futures trading only needs to pay 5% -10% of the performance bond to complete several times or even tens of times of contract trading.
Because of the leverage effect of futures trading margin system, traders can use a small amount of money to buy and sell large quantities, and the leverage of futures contracts is very large, up to 10 times or even 20 times. An
option is a contract that gives the holder the right to buy or sell an asset at an agreed price on a certain date. The subject matter of
options is stocks, government bonds, currencies, stock indices, commodity futures, etc.
Options are “derived” from these objects and are therefore called derivative financial instruments.
Unlike futures, the leverage of options is not fixed. Sometimes the leverage of options contracts with deep empty positions can be as high as 100 times. For example, in the crash on February 9, 2018, some options contracts soared more than 1000 times because of their huge leverage.
The 4th kind calls: Graded fund Graded fund is to point to below an investment combination, through pair of fund income or the decomposition of net assets, form the fund breed of share of risk income expression difference. Generally speaking, can divide fund product into two kinds, give different income allocation respectively, call A share or B share. The assets of
A share and B share are invested as a whole, in which the holder of B share pays the agreed interest to the holder of A share every year, and the overall investment profit and loss after paying the interest is borne by B share.
So from the principle, we can see that in fact, B share borrows money from A share to invest. If the market rises, B share will rise much higher than index. Of course, if the market falls, B share will fall faster.
In the bull market of 2015, the B share of some graded funds rose more than 10 times, far exceeding the range of the market index, which is the reason.
Of course, if it falls, the share of B will also fall badly.
The 5th kind is called: After priority is inferior, after priority is inferior, it is to point to in project of conduct financial transactions, the beneficial interest structure of the product is different, when the project suffers a loss, after first deficit is inferior, when making money, obtain fixed income first.
Generally speaking, the grading ratio of priority and inferiority ranges from 1:1 to 1:9. If the product consolidation income is higher, after deducting the priority fixed income, the inferior share may get a higher yield than financial product itself.
That’s what leverage is for.
For investors who want to get a yield of more than 10%, it is another way to magnify the risk and the yield through leverage.
The third concept is called “alternative investment”. As the market becomes more efficient, it is more and more difficult for traditional stocks and bonds to obtain high returns, but many alternative investments may provide better returns, such as hedge funds, equity funds, commodities, art and so on.
Historically, alternative investments have outperformed mutual funds and hedge funds by a wide margin, such as Blackstone’s flagship private equity fund, which has averaged 30.8% annual returns since its inception in 1987, or 22.8% after taxes and management fees. Alternative investment
in China is mainly in the form of private equity funds, especially private equity funds. The high growth of China’s economy in the
past decade has brought about a substantial increase in the equity value of many companies.
Although ordinary investors can not buy Tencent and Ali’s original shares, but Jingdong, millet and other domestic Internet giants, many of their early funds are obtained through private placement, those who participated in the angel round, a round and other early investors, make a lot of money.
But this kind of alternative investment, in the domestic threshold is relatively high, according to the latest private equity fund raising requirements, the minimum share is 1 million, which makes many small and medium-sized investors can not enjoy this high return.
The fourth concept is called “short selling.” There are four seasons in a year, and there is also a bull-bear transition in the market. There is no eternal bull market. When the bear market comes, even if the master escapes at the top of the bull market, in the long bear market in the future, he will not lose money at most and will not be able to continue to make money.
For example, since the peak of 6124 points in 2007, a shares have gone through ten years, and the current point is only about 2800 points, less than half of ten years ago.
In the past ten years, shareholders have naturally suffered heavy losses.
So how can you make money in a bear market?
This requires a short-selling mechanism.
Shorting is a common way of operation in the stock futures market. In anticipation of a downward trend in the stock futures market, the operator sells his chips at the market price and buys them after the stock futures fall to earn the middle price difference. Short selling in the
stock market is a reverse operation to do more, mainly through margin trading, borrowing stocks from securities companies to sell first, and then buying them back to securities companies after they fall, so as to earn the difference.
Futures and options have a natural short mechanism, the buyer of futures is long, the seller of futures is short; options also have two directions, one is called call options, the other is called put options. To
buy a call is to go long and to buy a put is to go short.
In a word, in the current market, if you want to pursue an annual return of 10%, you can’t do it only through ordinary investment methods. You need some professional methods and investment strategies. In the traditional investment market, you can find high-beta varieties, or enlarge the scale through leverage, or go to alternative markets to find high-yield opportunities. Or through the short mechanism in the bear market can also make money in the band.
This article only provides ideas and concepts, does not guarantee returns, and investment needs to be cautious.
). Focus on not getting lost ~
