Understanding Finance from scratch

Chapter 2 If you want to swim, you must first know how deep the water is - learn some financial market knowledge every day (1)
The stock market: the temptation of ups and downs
Xiao Hu, who has just been working for two years, is planning to buy a house in Beijing. His parents in Changchun took out the 30 yuan they had saved for decades, hoping to help him pay the down payment.At the beginning of the year, Xiao Hu heard his colleagues talk about how to make money from stocks, especially a colleague who bought bank stocks, who actually earned tens of thousands of yuan a month, which made Xiao Hu very excited.After he opened an account, he used his parents' money to buy more than 17.8 shares of a certain stock at a price of 1 yuan per share, hoping to make a fortune before leaving to buy a house.

Unexpectedly, in the following days, the price of the stocks he held began to fall, staring at the closing price every day, Xiao Hu was counting how much he lost in his mind; lying in bed at night was thinking about stocks, and it was difficult to fall asleep late at night.When the stock fell to 8.6 yuan, Xiao Hu's psychological defense was about to collapse, and a loss of nearly 10 yuan was enough for him to earn for a year or two.In the end, Xiao Hu, who couldn't sleep at night, turned to a psychologist for help.

In the stock market, various tragedies and comedies are staged every day.The red and green numbers are swapped, and the stock price goes up and down, which affects the hearts of countless investors. So why is the stock market so attractive?
The stock market is a market where issued stocks are transferred, traded and circulated at current prices, including the exchange market and the over-the-counter market.Because it is based on the issuance market, it is also called the secondary market.

For investors, through the activities in the stock circulation market, long-term investment can be short-term, and they can switch between stocks and cash at any time, which enhances the liquidity and security of stocks.The price in the stock market is a barometer that reflects economic trends. It can sensitively reflect changes in capital supply and demand, market supply and demand, industry prospects, and political situations. It is an important indicator for economic forecasting and analysis.For enterprises, the transfer of equity and the fluctuation of the stock market are indicators of their operating conditions, and can also provide enterprises with a large amount of information in a timely manner, which is helpful for their business decisions and improvement of business management.

The earliest joint-stock companies originated from overseas trading companies established in the Netherlands and the United Kingdom in the early 17th century. These companies were established by raising share capital and have obvious characteristics of joint-stock companies: they have legal person status, set up a board of directors, and the general meeting of shareholders is the highest authority of the company. Dividends according to shares, implementation of limited liability system... The successful operation and rapid development of the joint-stock company has caused more companies to follow suit, and set off a wave of joint-stock companies in the Netherlands and the UK.By 1695, about 100 new joint-stock companies had been formed in England.

In the late 18th century, Britain began the Industrial Revolution, and large-scale machine production gradually replaced the factory handicraft industry.In this reform, the shareholding system made great contributions.As the Industrial Revolution spread to other countries, the shareholding system spread throughout the capitalist world.

In fact, the stock market is a speculative financial market.Its method of speculatively buying and selling stocks is the same as the gambling market and lottery market, or there is no essential difference.Those who make money sell their stocks, and those who do not make money buy stocks to become new investors or shareholders, waiting for the next surf.When the next surfing comes, those who make money leave, and those who do not make money come in again, and the cycle continues wave after wave.However, there is no stock that rises forever, and when the stock price rises to a certain height, it will definitely fall.Those who bought at a high level held on to their shares and became long-term speculators, waiting for an opportunity to sell again.When the stock price falls, many people enter the market to buy stocks. They think that the stock has fallen in place. When he bought the stock of the day, the stock still fell the next day. Become a long-term speculator.Such a wave of falling down, the late entrants are caught wave after wave and become long-term speculators.These long-term speculators are waiting for the stock to rise to their entry price.However, there is no stock that will fall forever. When the stock price falls to a certain level, the stock price will definitely rise.When the stock price rises to a certain price, those who bought stocks at a low price will sell their stocks, and those who bought stocks will wait for the further appreciation of the stock price.

Another point is that in stock trading, the reason why a stock is bought is because investors or investment institutions who buy the stock believe that the price will rise after buying the stock; Institutions believe that the price will drop after selling this stock.The former is doing "long positions", while the latter is doing "short positions".In a period of time after the transaction, the stock price has risen to a certain range. At this time, the "long" sells the stock and makes money, while the "short" loses money.Of course, the current Chinese stock market does not have a short-selling mechanism, and the winners and losers of the long and short positions will not be reflected immediately, but will be reflected after he sells the stock.This kind of unilateral operation can reduce the number of times speculators have risks by half.For example, if everyone's capital is the same, if 100 people win money, 100 people must lose money.If a small number of longs make a lot of money, there must be a small number of shorts who lose a lot of money, or most people lose a small amount of money to balance the big money won by a few people. The ratio of the number of winners and losers changes greatly, and the result is that a few people win money , most people lose money.The stock market is such an open, fair and just place for speculative games.

In the stock market, according to the length of holding operations, it is divided into short-term investment and long-term investment.There is no distinction between short-term and long-term, as long as you adapt to it, as long as you are good at it.Under the premise of risk control measures, short-term accumulation can make a lot, and excess returns can also be obtained in a round of market conditions.On the premise of choosing the right stocks, the long-term can achieve very stable and high returns.

Some people vividly say that a short-term trader is an artist, because no matter whether the market goes up or down, he (she) needs to maintain enthusiasm for the market at all times, and always be in a state of tension and excitement.The long-term trader is an engineer, he (she) needs to control and correct the whole process, and needs to endure the reasonable adjustment of the market during the period and the wide fluctuation in the abnormal period, as well as the loneliness and loneliness in the market downturn.Therefore, what the former needs is passion, and what the latter needs is rationality.

The stock market attracts tens of thousands of people to participate in the unique form of ups and downs, wins and losses, so as to achieve the purpose of raising funds for enterprises.It is the ups and downs of stock prices that create opportunities for speculation to make money and become a paradise for speculators, which makes the stock market enduring for hundreds of years and spread all over the world.For investors, when you are about to enter the stock market, you must always remind yourself: you are investing more than taking risks.In this market, you may lose all your money, and the degree of risk is no less than that of the gambling market and lottery market.

The bond market: the "short leg" of financial markets

A well-known textile logistics group has 1 million yuan of funds that have to be idle for 3 months during the off-season. The group boss hopes that the deposits will be higher than the income. The first thing is to ensure safety and liquidity. They must be returned after 3 months and cannot be invested in stocks. Funds must be safe.Therefore, there are two options. The traditional way is to buy a 3-month bond. You can buy a financial bond like the 2003th issue of the China Development Bank in 17. Its price is 99.34 yuan per 66 yuan face value, so in the end you can get To 42.8 yuan, if the fixed deposit income is only [-] yuan.

Bonds are increasingly favored by investors due to their characteristics of stability, safety, and higher returns, and the bond market is also attracting increasing attention.So what is the function and structure of the bond market?What is the current level of development of my country's bond market?
The bond market, where bonds are issued and bought and sold, is an important part of financial markets, although we don't currently understand it as well as we do the stock market.A unified and mature bond market can provide investors and fundraisers of the whole society with low-risk investment and financing tools; the yield curve of bonds is the benchmark of the income level of all financial commodities in the social economy, so the bond market is also the transmission of central bank currency important carrier of policy.It is no exaggeration to say that a unified and mature bond market forms the basis of a country's financial market.

In fact, bonds and bond markets existed long before the advent of capitalist economies.Ancient bonds such as national bonds and pawn tickets have appeared in slave society and developed in feudal society.According to research, the world's earliest bonds were issued in the Republic of Venice in the 12th century.Corporate bonds also began to emerge at the end of feudal society.The world's first stock exchange, the Paris Bourse, was established in 1304.In the early stage of the rise of the stock exchange, the main business was to buy and sell government bonds, and stock trading was limited.

Like the stock market, the bond market is composed of a primary market and a secondary market, namely the bond issuance market and the bond circulation market.The primary bond market refers to the market formed by government agencies, financial institutions, enterprises and other capital demanders who issue new bonds to raise funds and sell bonds to investors through bidding or underwriters, also known as the issuance market; The bond secondary market is also known as the circulation market, and all issued and eligible treasury bonds and corporate bonds can be traded on exchanges and the inter-bank bond market.

In the mature capital market system abroad, the bond market and the stock market go hand in hand.For example, in 2001, the stock market value of the United States accounted for 168% of GDP, and the equivalent of bonds was 143%.Another figure may be more telling. Global bonds are equivalent to 95% of GDP.But the total value of my country's bonds at the end of 2001 was only equivalent to 29% of GDP.The United States has issued 3.1 trillion US dollars of government bonds, 3.4 trillion US dollars of corporate bonds, and 2.7 trillion US dollars of asset securitization bonds. 16 times that of corporate bonds.But in my country, in 2001, about 4884 billion yuan of national bonds were issued, while the total issuance of corporate bonds was less than 400 billion yuan.Therefore, no matter from the perspective of the relationship between the bond market and the stock market in the capital market, or from the perspective of the capital structure of enterprises, the bond market, especially corporate bonds, has a lot of room for development in the development of my country's capital market.

At present, my country's bond market consists of three parts: the inter-bank bond market, the exchange bond market and the bank counter bond market. These three markets are independent of each other, but each has its own focus.Among these three markets, the bank counter bond market has just started, while the inter-bank bond market and the exchange bond market are constantly maturing.

Among them, the most closely related to our ordinary investors is the bank counter bond market. The participants in this market are individual and corporate investors who open accounts in commercial banks.At present, the types of bonds that investors can invest in through the bank counter bond market include certificate treasury bonds and book-entry treasury bonds. Among them, certificate treasury bonds cannot be circulated and transferred, and the actual investors are middle-aged and elderly individual investors. The launch of the transaction can better meet the national bond investment needs of investors such as individuals and enterprises.However, since the current book-entry treasury bond over-the-counter trading business is only piloted in some regional outlets of the four major state-owned banks of Industry, Agriculture, China, and Construction Banks, and only book-entry treasury bonds can be traded, the bank counter bond market is just in its infancy. To be further promoted.The way of over-the-counter trading of book-entry treasury bonds is spot bond trading.

The exchange bond market is a place for on-site trading of bonds in my country. At present, both the Shanghai Stock Exchange and the Shenzhen Stock Exchange have bond trading business.At present, the participants in bond transactions on the Shanghai and Shenzhen Stock Exchanges are non-bank investors who open securities accounts on the exchanges, and the actual transaction entities are securities companies, insurance companies, and urban and rural credit cooperatives.The types of securities traded are treasury bonds, corporate bonds, and convertible bonds listed on the exchange.Transaction types include spot bond transactions and pledged repurchase transactions.

As we said earlier, due to market constraints and institutional reasons, there is a huge gap between my country's bond market, especially corporate bonds, and developed countries in terms of scale, variety, and market development. Compared with my country's rapidly developing stock market, the bond market is relatively sluggish, and has always been a "short leg" of my country's capital market.This is unhealthy for my country's financial market. Fortunately, relevant departments are working hard to promote the development of the bond market. We hope to usher in the spring of the bond market as soon as possible!
Fund Market: Safely Turning Savings into Investments
"Have you bought funds?" In a hair salon, a barber asked a customer.He said he often hears customers talk about this.In fact, in 2005, "fund" was a relatively uncommon term.Prior to this, China's stock market continued to slump, and people were more willing to keep their money in the bank.However, an unprecedented bull market came suddenly in 2006, and the money-making effect of the fund market gradually fermented. On November 2006, 11, the Shanghai Composite Index broke through the 20-point mark. On January 2000, 2007, the Shanghai Composite Index broke through 1 points, and set a record of 22 billion yuan in daily turnover.With the prosperity of the stock market, fund investment began to enter the lives of most Chinese people.

How is the development of the fund market in our country?What about its structural hierarchy?

From the perspective of capital relationship, funds refer to funds that are used for a specific purpose and are independently accounted for, including pension insurance funds, retirement funds, relief funds, education incentive funds, etc., but what we are talking about here is only investment funds .Investment funds refer to the basic principles of joint investment, shared benefits, and shared risks, as well as certain principles of joint stock companies, using the mechanism of modern trust relationships to gather the scattered funds of various investors in the form of funds to achieve expectations. Investment organization system for investment purposes.

Investment funds originated in Britain in the middle of the 19th century. The development of the industrial revolution promoted the accumulation of wealth, which in turn promoted financial innovation. In 1868, the British government took the initiative to establish overseas and colonial government trust organizations, and publicly sold income certificates to the public. It is considered to be the earliest fund.Although investment funds originated in the United Kingdom, they are prevalent in the United States.After the First World War, the United States replaced the United Kingdom as the new hegemony of the world economy, and it changed from a capital-importing country to a major capital-exporting country.With the substantial growth of the US economy, the increasingly complex economic activities have made it increasingly difficult for some investors to judge economic trends.In order to effectively promote foreign trade and foreign investment, the United States began to introduce the investment trust fund system. In 1926, Boston's Massachusetts Financial Services Corporation established "Massachusetts Investment Trust Company", which became the first mutual fund in the United States with a modern look.In the following years, the fund experienced its first glorious period in the United States.By the end of the 19s, the total assets of all closed-end funds had reached 20 billion US dollars, and the total assets of open-end funds were only 28 million US dollars, but the growth rate of the latter was higher than that of both in terms of quantity and total assets. closed-end fund. In the 1.4s, the total asset value increased by more than 20% every year, and the growth rate in 20 exceeded 1927%.

The term fund has only appeared in the Chinese market for more than 8 years. So far, the penetration rate is still not high. There are about 1000 million Christians in China, but there are still a small number of people who really know and understand funds.However, more and more small and medium-sized investors are now favoring funds, because the essence of investment funds is to exchange small money into big money, providing small investors with a channel to various investment markets.Ordinary investors generally have limited funds and cannot effectively combine numerous investment tools, while investment funds can effectively solve the above problems.

In the fund market, there are three basic market subjects, namely fund investors, fund managers and fund custodians.After the establishment of an investment fund, it generally conducts investment operations through the establishment of a trust, entrusts the fund manager to manage and use the fund property, and entrusts the fund custodian to keep the fund assets.Fund investors are trustees and beneficiaries, and fund managers and fund custodians are trustees.

There are subjects, of course there are objects, and the objects in the fund market are all kinds of funds.

According to investment objects, investment funds can be divided into the following categories:

Stock Fund: Refers to an investment fund that invests in stocks.Due to the different nature of various stocks in the market, stock funds can be subdivided into positive growth type, growth type and growth income type.

Bond Fund: Refers to an investment fund that invests in bonds.Bond funds are more sensitive to changes in interest rates.

Hybrid Fund: Refers to an investment fund that invests in both stocks and bonds.Since the goal of a hybrid fund is to take into account principal growth and fixed dividends, its risks and returns are between stock funds and bond funds.

Money market fund: refers to an investment fund that invests in short-term securities in the money market such as treasury bills, negotiable certificates of deposit, commercial paper, and corporate bonds.

Foreign Exchange Fund: Refers to investment funds that invest in the currencies of various countries (foreign exchange).Due to the sharp fluctuations in exchange rates, the risks and returns of the Exchange Fund are relatively large.

Futures Fund: Refers to investment funds that mainly invest in various types of futures.The risks and returns of futures funds are also relatively large.

(End of this chapter)