Learn a little bit of finance every day

Chapter 37 Securities Market: "Gold Panning" in Opportunities and Risks (3)
Speculation refers to the trading behavior of seizing opportunities based on market judgments, using price differences in the market to buy and sell, and gaining profits from it.Speculators can "buy short" (Long) or "short" (Short).A more popular definition is: speculation is an investment opportunity (a type of investment behavior), and if there is no opportunity, you will not enter the market, just like hunting, never shoot until you see the prey.People’s daily purchases of lottery tickets, stocks, etc., using the information they have obtained to make trading choices based on their own resources, are all a type of speculation.The purpose of speculation is straightforward-to obtain a profit from the price difference.But speculation is risky.

Since the stock market, speculation and investment have been accompanied.In other words, it is precisely because of investment and speculation that there is a stock market.Stock investors care about the operating performance and development prospects of listed companies, while speculators care more about the stock price itself, and whether the company itself has growth potential is not so important.So people often regard speculators as "gamblers".But in fact, moderate speculation is an indispensable adjustment mechanism for the market. Of course, excessive speculation will lead to disastrous consequences, just like the tulips above.Excessive speculation is often an important cause of stock market bubbles.

A stock market bubble is actually a continuous and sudden increase in the price of a stock, greatly deviating from its basic value. As long as people expect the price to rise further, more buyers will join the army of fanatical speculation.When the price reaches a certain level and people cannot bear it psychologically, the bursting of the price bubble will be unstoppable, often ending in a financial crisis.

Public Companies: The Cornerstone of the Stock Market
In the second half of 2007, individual stocks in the oil industry fell sharply, and other heavyweight stocks generally performed weakly.PetroChina Co., Ltd. was officially listed on the Shanghai Stock Exchange on November 2007, 11. PetroChina A shares opened at 5 yuan, a 48.62% increase from the issue price. This price also exceeded the forecast of most institutions.Subsequently, PetroChina's stock price fluctuated, and finally closed at 191 yuan, an increase of 43.96%, with a total turnover of 163.23 billion yuan, becoming the largest A-share stock by market value, accounting for nearly a quarter of the Shanghai Composite Index.Including the value of the H-share market, its total market value is close to 699.9 billion US dollars, surpassing Exxon Mobil's 10075 billion US dollars, becoming the world's largest listed company by market value.It is said that there is a huge sum of 4877 billion to stir up PetroChina, making it the world's largest listed company.

The reason why PetroChina's A-shares opened well is largely because PetroChina has strong development strength and stable policy support.Behind every stock, there is a listed company as the cornerstone.Listed companies also obtain long-term financing through the issuance of shares.But the good times didn't last long, and soon PetroChina began to plummet all the way to 16 yuan. It came down before sitting on the throne of the world's largest listed company by market value.

Listed companies are the cornerstone of the stock market.Stocks are created in listed companies.If there are no listed companies, there will be no stock market, and if listed companies fail, the stock market will cease to exist.

A listed company refers to a joint-stock company whose shares are listed and traded on a stock exchange after being approved by the State Council or a securities management department authorized by the State Council.A listed company is a type of joint stock limited company. This kind of company must meet certain conditions in addition to being approved for listing on the stock exchange.

1. The listed company is a joint stock company.A company limited by shares can be an unlisted company, but a listed company must be a company limited by shares;
2. Listed companies must be approved by the competent government department.According to the provisions of the "Company Law", a joint stock limited company must be approved by the State Council or the securities management department authorized by the State Council to be listed. Without approval, it cannot be listed.

3. Shares issued by listed companies are traded on stock exchanges.Issued shares that are not traded on a stock exchange are not listed shares.

A listed company also has the general characteristics of a joint stock limited company, such as limited liability for shareholders, ownership and management rights.Shareholders participate in corporate decision-making by electing the board of directors and voting.

Compared with ordinary companies, the biggest feature of listed companies is that they can use the securities market to raise funds and widely absorb idle funds from the society, thereby rapidly expanding the scale of enterprises and enhancing product competitiveness and market share.Therefore, after the joint stock company develops to a certain scale, it often takes the company's stock to be publicly listed on the stock exchange as an important strategic step for enterprise development.Judging from international experience, almost all world-renowned large companies are listed companies.For example, 500% of the 95 largest companies in the United States are listed companies.

In fact, a listed company divides the company's assets into several shares and trades in the stock exchange market. Everyone can buy the company's stock and become a shareholder of the company. Listing is an important channel for company financing; unlisted Shares in a company cannot be traded on the stock exchange.Listed companies need to regularly disclose the company's assets, transactions, annual reports and other relevant information to the public.However, in terms of profitability, it cannot be absolutely said who is better and who is worse. Being listed does not mean how strong the profitability is, and not being listed does not mean that there is no profitability.Of course, if a company with strong profitability goes public, it will be more likely to be sought after.

The goal of the stock market is to optimize capital allocation, provide limited funds to excellent companies with high efficiency and great potential, and help them increase investment and achieve better development.The quality of listed companies will promote the prosperity and stability of the stock market.Listed companies are the cornerstone of the stock market.If the foundation is not stable, it is difficult for people to see a prosperous and stable stock market.If there is, it is also a temporary illusion.If a listed company is poorly managed and its performance declines, investing in its stocks will not get a good return. Even if the price is temporarily maintained at a high level, it will eventually cause heavy losses to investors due to the bursting of the "bubble".If the overall economy is in a downturn and the performance of listed companies is not good, but the stock market continues to prosper, it often indicates that a stock market crash may follow.

Fund Market: A Rising Star in Securities
As a working class, Xiao Wang has been suffering from no capital, unable to get a share of the stock market.As soon as the year-end bonus was issued, Xiao Wang went to the bank to open an account with the money, ready to enter the market.In the bank, he found that many people who came to open an account like him had to wait for more than an hour to open a bank account.In the afternoon, Xiao Wang went to the securities company to open an account. The scene was even more popular. Customers who came to open an account lined up from the counter of the securities company to the elevator entrance.It took him another afternoon to open the securities account and capital account. "It took me a long time to line up at the bank, and I have to go to the securities company to continue the line. It's a queuing relay race! It took me a whole day to open an account." Xiao Wang said helplessly.

The "quasi-based citizen" Mr. Zhang is more distressed than Xiao Wang.A few days ago, Mr. Zhang went to a large bank on Baogang Avenue to open a fund account. Due to the large number of people handling the business, and the processing time for each person was relatively long.After waiting in the bank for more than 4 hours, Mr. Zhang saw that the bank's business hours were about to end, but there were still many people queuing in front, so he had no choice but to give up and return without success.

With the strengthening of China's economic strength, Chinese people have started to invest and manage money. In 2006, the stock market began to boom, and countless investors emerged in China.The fund market has also become active, and many people are "jobs" of stockholders and basic citizens.As the stock market plunged in 2008, stock investors shook their heads and sighed. If they had known this, they might as well buy a few funds in peace.

Funds can be divided into broad and narrow senses. In a broad sense, funds are collectively referred to as institutional investors, including trust investment funds, unit trust funds, provident funds, insurance funds, retirement funds, and funds of various foundations.Funds in the existing securities market, including closed-end funds and open-end funds, have the characteristics of income function and value-added potential.From an accounting point of view, a fund is a narrow concept, which means funds with specific purposes and uses.Because the funders of the government and public institutions do not require investment returns and investment recovery, but require the funds to be used for designated purposes according to legal regulations or the wishes of the funders, a fund is formed.Funds are a rising star in the securities industry, but their development speed is not inferior to that of stocks and bonds.

After World War II, the U.S. economy resumed its strong growth momentum, and investor confidence quickly recovered.Under strict legal protection, investment funds, especially open-end funds, have become active again, and the size of funds has increased year by year.After entering the 70s, investment funds in the United States experienced explosive growth.In the 1974 years from 1987 to 13, the size of investment funds increased from $640 billion to $7000 billion.At the same time, the U.S. fund industry also broke through the limitation of only investing in common stocks and corporate bonds for more than half a century, and launched money market funds and Federal Reserve funds in 1971; municipal bond funds and long-term bond funds began to appear in 1977; In 1979, a tax-free monetary fund appeared for the first time; in 1986, an international bond fund was launched.By the end of 1987, there were more than 2000 different funds in the United States, held by nearly 2500 million people.Due to the variety of investment funds and the scattered investment focus of various funds, during the stock market crash in 1987, the total assets of investment funds in the United States not only did not decrease, but also increased in number.

In the early 90s, about 80% of the newly injected funds in the US stock market came from funds, and in 1992 this proportion reached 96%.From 1988 to 1992, the proportion of investment funds in total US stocks rose sharply from 5% to 35%.By 1993, on the New York Stock Exchange, individual investments accounted for only 20 percent of stock market capitalization, while funds accounted for 55 percent.By the end of 1997, there were about 7.5 trillion US dollars of fund assets in the world, of which the assets of US funds were about 4 trillion US dollars, which had exceeded the total savings deposits of US commercial banks.From 1990 to 1996, investment funds grew at a rate of 218%.During this period, more and more institutional investors with huge capital, including bank trust departments, trust companies, insurance companies, pension funds, and various consortiums or foundations, etc., began to invest heavily in investment funds.The United States has become the most developed country in the fund industry in the world. Following the footsteps of the United States, the fund markets in countries and regions such as Europe and Japan have also developed rapidly. Funds have become a major way of global investment and wealth management.

Commonly referred to as funds refer to securities investment funds.Investment fund refers to a kind of interest-sharing and risk-sharing in which securities investment is carried out in the form of investment portfolio by collecting the funds of many investors through the sale of fund shares to form independent assets, managed by fund custodians and fund managers collective investment method.Its advantages lie in: integrating a large number of scattered and small funds as a whole; entrusting experienced experts to operate and manage; diversifying investment and reducing risks.

Securities investment funds can be divided into open-end funds and closed-end funds.Open-end funds are not listed and traded, and are generally purchased and redeemed through banks, and the fund size is not fixed; closed-end funds have a fixed duration, during which the fund size is fixed, and are generally listed and traded on stock exchanges, and investors buy and sell funds through the secondary market unit.

Securities investment funds are an indirect form of securities investment.The fund management company concentrates investors' funds by issuing fund units, and the fund custodian, generally referring to a bank, manages and uses the funds to invest in financial instruments such as stocks and bonds, and then shares investment risks and benefits .

China Investment Fund started in 1991. At that time, there were only two Shenzhen “Nanshan Venture Capital Fund” and “Wuhan Securities Investment Fund”, with a scale of 9000 million yuan. In 1992, with the establishment of 37 funds including Hainan "Fudao Fund", Shenzhen "Tianji Fund", and Zibo "Township Enterprise Investment Fund", the scale of my country's investment funds began to expand. By the end of 1994, there were 73 investment funds in my country , of which 31 funds have been listed as listed funds on the Shanghai and Shenzhen Stock Exchanges and some regional securities trading centers.

Modern Hedge Funds: Risk Hedging Has Lost Its Name
The world-renowned "financial genius" George Soros has created incredible performance since he established the "Quantum Fund" in 1969. With an average annual compound growth rate of 35%, his Wall Street counterparts are far behind.He seems to have a super power to control the world's financial markets.In his investment career, there was a classic hedge fund investment case.

(End of this chapter)