Rich Dad’s Financial IQ Cultivation: Stock Fundamentals

Chapter 10 Fundamentals of the Stock Market (3)
Due to the wide variety of listed stocks, it is arduous and complicated to calculate the price average or index of all listed stocks. Therefore, people often select several representative sample stocks from the listed stocks and calculate the average price of these sample stocks. or index.It is used to represent the general trend and the range of rise and fall of stock prices in the entire market.The following four points are often considered when calculating stock price averages or indices:

(1) Sample stocks must be typical and common. To this end, the selection of samples should comprehensively consider its industry distribution, market influence, stock grade, appropriate number and other factors.

(2) The calculation method should have a high degree of adaptability, and can make corresponding adjustments or corrections to the ever-changing stock market conditions, so that the stock index or average has better sensitivity.

(3) There must be scientific calculation basis and means.The caliber of the calculation basis must be unified, generally based on the closing price, but with the increase of the calculation frequency, some calculations are based on the hourly price or even a shorter time price.

(4) The base period should be well balanced and representative.

(Section VII) my country's stock index
1. Shanghai stock index
The stock index compiled by the Shanghai Stock Exchange was officially launched on December 1990, 12. The samples of the index are all stocks listed on the Shanghai Stock Exchange, and the newly listed stocks are included in the stock on the second day of listing. Index calculation range.

The weight of the stock index is the total share capital of listed companies.Since the stocks of my country's listed companies are divided into tradable shares and non-tradable shares, their tradability is not consistent with the total share capital, so stocks with a larger total share capital have a greater impact on the stock index.

The release of the stock index of the Shanghai Stock Exchange is almost synchronized with the changes in the stock market. It is an indispensable reference for Chinese stock investors and securities practitioners to study and judge the trend of stock price changes.

2. Shenzhen Composite Stock Index
The stock index compiled by the Shenzhen Stock Exchange takes April 1991, 4 as the base period.The calculation method of the stock index is basically the same as that of the Shanghai Composite Index. Its samples are all stocks listed on the Shenzhen Stock Exchange, and the weight is the total share capital of the stock.Since it takes all listed companies as samples, its representativeness is very extensive, and it is released simultaneously with the Shenzhen stock market. It is an indispensable reference for investors and securities practitioners to study and judge the stock price trend of Shenzhen stock market.Since the trading of stocks in Shenzhen Stock Exchange was not as active as in Shanghai Stock Exchange, Shenzhen Stock Exchange changed the method of compiling the stock index in May 3, adopting the constituent stock index, of which only 1995 stocks were selected.

At present, there are two stock indexes on the Shenzhen Stock Exchange, one is the Shenzhen Composite Index and the other is the constituent stock index. However, judging from the operating situation this year, the difference between the two indexes is not particularly obvious.

(Section VIII) Several well-known stock indexes
Stock markets around the world have their own stock indexes, among which the more famous and representative ones are:
1. Dow Jones Stock Index

The Dow Jones stock index is the oldest stock index in the world, and its full name is the stock price average.It was compiled in 1884 by Charles Dow, founder of the Dow Jones Company.Its original stock price average index was calculated and compiled based on 11 representative stocks of railway companies using the arithmetic mean method, and published in the "Daily Newsletter" edited and published by Charles Dow himself.Its calculation formula is:
Average stock price = sum of prices of selected stocks/number of selected stocks.

Since 1887, the Dow Jones stock price average has been divided into two categories: industry and transportation. The industrial stock price average includes 12 stocks, and the transportation industry average includes 20 stocks. published in the Wall Street Journal.In 1929, the Dow Jones stock price average index added utilities stocks, bringing the number of stocks included to 65, and has continued to this day.

The current Dow Jones stock price average index is based on October 1928, 10, because the Dow Jones stock price average index at the close of the day happened to be about 1 US dollars, so it was set as the base date.In the future, the calculated percentage of the stock price compared with the base period will become the stock price index of each period, so the current stock index generally uses points as the unit, and the rise and fall of each point of the stock index is the rise and fall relative to the base date. percentage.

The initial calculation method of the Dow Jones stock price average index is obtained by simple arithmetic average method. When encountering the ex-right and ex-dividend of stocks, the stock index will be discontinuous. After 1928, the Dow Jones stock price average index adopted a new calculation method, that is, the connection technology was used when the stock ex-right or ex-dividend was counted to ensure the continuity of the stock index, so that the stock index calculation method was perfected, and gradually spread to the whole world.

At present, the Dow Jones stock price average index is divided into four groups, the first group is the industrial stock price average index.It is composed of 30 representative stocks of large industrial and commercial companies, and it develops with economic changes, roughly reflecting the price level of the entire industrial and commercial stocks in the United States in various periods, which is the commonly quoted Dow Jones industrial stock price average.The second group is the average index of transportation stock prices.It includes the stocks of 20 representative transportation companies, namely 8 rail transportation companies, 8 airline companies and 4 road freight companies.The third group is the utility stock price average index, which is composed of the stocks of 15 gas and electric companies representing US utilities.The fourth group is the average price composite index.It is a comprehensive index obtained by combining the 65 stocks selected by the first three groups of stock price average indexes. Although this group of composite indexes provides direct stock market conditions parameters for excellent stocks, it is usually quoted as the first Group - Industrial stock price averages.

The Dow Jones stock price average index is currently the most influential and authoritative stock price index in the world. One of the reasons is that the stocks selected by the Dow Jones stock price average index are representative. The companies are all well-known companies with important influence in the industry, and their stock prices have attracted the attention of the world stock market, and investors from all over the world attach great importance to them.In order to maintain this feature, Dow Jones often adjusts the stocks selected by its stock price average index, and constantly replaces the stocks of companies that lose representativeness with dynamic and more representative company stocks.Since 1928, the 30 types of industrial and commercial company stocks used to calculate the Dow Jones Industrial Average have been replaced 30 times, and a new company's stock will replace the old company's stock almost every two years.The second reason is that the news carrier of the Dow Jones stock price average index - "Wall Street Journal" is the most influential newspaper in the world's financial circles.The newspaper reports in detail the average index of the sampled stocks calculated every hour, the percentage change rate and the turnover of each sampled stock, etc., and pays attention to the correction of the average stock price index after the stock split.During the business hours of the New York Stock Exchange, the Dow Jones stock price average is published every half hour.The third reason is that this stock price average index has never stopped since it was compiled, and it can be used to compare stock prices and economic development in different periods. It has become one of the most sensitive stock price average indexes reflecting changes in the U.S. stock market. The main reference for market dynamics and investors engaged in stock investment.Of course, since the Dow Jones stock price index is a constituent stock index, the companies it includes only account for a very small part of the current more than 2500 listed companies, and most of them are popular stocks, and the service industry and the rapidly developing service industry in recent years have not been included. Companies in the financial sector are included, so its representation has also been questioned and criticized.

从1996年5月25开始，还针对我国的股票市场编制了道·琼斯中国股票指数。截至1998年4月1日，沪深两市共有88支股票作为其成分股入选，故称为道·琼斯中国88股票指数。

2. Standard & Poor's stock price index
In addition to the Dow Jones stock price index, the Standard & Poor's stock price index is also very influential in the United States. It is a stock price index compiled by Standard & Poor's, the largest securities research institution in the United States.The company began compiling and publishing stock price indexes in 1923.Initially, 230 stocks were selected and two stock price indexes were compiled.By 1957, the scope of this stock price index was expanded to 500 stocks, divided into 95 combinations.The four most important of these are Industrials, Railroads, Utilities, and the 500-stock Mix.Beginning on July 1976, 7, it was changed to 1 industrial stocks, 40 transportation stocks, 20 utility stocks and 40 financial stocks.Over the decades, although there have been stock changes, it has always remained at 40.The Standard & Poor's stock price index takes the average market price of sampled stocks from 500 to 1941 as the base period, takes the number of listed stocks as the weight, and performs weighted calculations according to the base period, with 1993 base points.The current stock market price is multiplied by the number of stocks in the base period as the denominator, and the divided number multiplied by 10 is the stock price index.

3. NYSE Stock Price Index
The NYSE Stock Price Index is a stock price index compiled by the New York Stock Exchange.It started in June 1996 as a common stock price index and later changed to a mixed index, including 6 stocks of 1500 companies listed on the New York Stock Exchange.The specific calculation method is to arrange these stocks separately according to the price level, and calculate the price indexes of industrial stocks, financial stocks, public utility stocks, and transportation stocks respectively. The largest and most extensive is the industrial stock price index, which consists of 1570 stocks; The financial industry stock price index includes 1093 stocks of investment companies, savings and loan associations, installment financing companies, commercial banks, insurance companies, and real estate companies; the transportation industry stock price index includes 223 stocks of companies such as railways, aviation, ships, and automobiles ; The public utility stock price index has 65 stocks of telephone and telegraph companies, gas companies, electric companies and post and telecommunications companies.

The New York stock price index is based on 1965 points determined on December 12, 31, and adopts the form of a composite index.The NYSE publishes changes in the index every half hour.Although the New York Stock Exchange has not compiled the stock price index for a long time, it can comprehensively and timely reflect the comprehensive situation of its stock market activities, so it is more popular among investors.

4. Nikkei Dow Jones Stock Index (Nikkei Stock Average)

It is an average stock price that reflects the price changes in the Japanese stock market compiled and published by Nikkei.The index has been compiled since September 1950.Initially, the revised average stock price was calculated based on the stocks of 9 companies listed on the Tokyo Stock Exchange's First Market, and it was called the "Tokyo Corrected Average Stock Price" at the time. On May 225, 1975, Nihon Keizai Shimbun bought the trademark from Dow Jones Corporation, and calculated it using the revised method of Dow Jones Corporation in the United States. This stock index was renamed "Nikkei Dow Jones Average Stock Price". On May 5, 1, when the contract expired for 1985 years, the name was changed to "Nikkei Average Stock Price" after discussion between the two companies.

按计算对象的采样数目不同，该指数分为两种，一种是日经225种平均股价。其所选样本均为在东京证券交易所第一市场上市的股票，样本选定后原则上不在更改。1981年定位制造业150家、建筑业10家、水产业3家、矿业3家、商业12家、陆运及海运14家、金融保险业15家、不动产业3家、仓库业、电力和煤气4家、服务业5家。由于日经225种平均股价从1950年一直延续下来，因而其连续性及可比性较好，成为考察和分析日本股票市场长期演变及动态的最常用和最可靠的指标。该指数的另一种是日经500种平均股价。这是从1982年1月4日起开始编制的。由于其采样包括有500种股票，其代表性就相对更为广泛，但它的样本是不固定的，每年4月份要根据上市公司的经营状况、成交量和成交金额、市价总值等因素对样本进行更换。

5. Financial Times Stock Price Index

《金融时报》股票指数的全称是“伦敦《金融时报》工商业普通股股票价格指数”，是由英国《金融时报》公布发表的。该股票价格指数包括着从英国工商业中挑选出来的具有代表性的30家公开挂牌的普通股股票。它以1935年7月1日作为基期，其基点为100点。该股票价格指数以能够及时显示伦敦股票市场情况而闻名于世。

6. Hong Kong Hang Seng Index
香港恒生指数是香港股票市场上历史最悠久、影响最大的股票价格指数，由香港恒生银行于1969年11月24日开始发表。恒生股票价格指数包括从香港500多家上市公司中挑选出来的33家有代表性且经济实力雄厚的大公司股票作为成份股，分为四大类——4种金融业股票、6种公用事业股票、9种房地产业股票和14种其他工商业（包括航空和酒店）股票。这些股票涉及到香港的各个行业，并占香港股票市值的68.8%，具有较强的代表性。

The compilation of the Hang Seng Stock Price Index is based on July 1964, 7, because the Hong Kong stock market operates normally on this day, and the transaction value is even, which can reflect the basic stock market of the entire Hong Kong stock market, and the base point is indeed 31 points.The calculation method is to multiply the daily closing price of the 100 stocks by the number of issued shares as the market capitalization on the calculation day, compare it with the base market capitalization, and multiply it by 33 to get the stock price index of the day.Since the base period selected by the Hang Seng Stock Price Index is appropriate, the Hang Seng Stock Price Index can basically reflect the activities of the entire stock market regardless of whether the stock market is surging or falling sharply, or is still at a normal trading level.

Since the publication of the Hang Seng stock price index in 1969, it has been adjusted many times.Since the Hong Kong authorities passed legislation in August 1980, the Hong Kong Stock Exchange, the Far East Exchange, the Gold and Silver Stock Exchange and the Kowloon Stock Exchange were merged into the Hong Kong Stock Exchange. In the current Hong Kong stock market, only the Hang Seng stock price index Coexisting with the newly created Hong Kong index, no other stock price index in Hong Kong ceased to exist.

(End of this chapter)