A discussion on Investor Behavior Theory and Its Market in China

Abstracts: Stock investors act theory is an extension of the classical theory of a balanced market, a balanced analysis of the use of in the stock market. The theory emphasizes investor in the "economic man" under the conditions of investment motives, to illustrate the securities market must be to improve the market system as the basis, the market mechanism into full play the role of the economy with Bayesian Lixing parties and can be accessible under the conditions of market information, investors only have a rational arbitrage. based on investor behavior, China's securities market to improve market system based on building a balanced market based on the macro and micro environment, fostering rational investors.

Paper Keywords: investor behavior, rational investment, balanced market

First, the theory of formation and development of investor behavior

Since the inception of economics, "economic man" thought has been dominated economic circles. In the classical economists, the market mechanism as the "invisible hand" dominate "economic man" behavior, the market price to changes in supply and demand as timely adjustment, socio-economic status is always in equilibrium. equilibrium theory since the inception of Adam Smith, the neo-classical economic school of Marshall, Walras and the Friedman monetarist, rational expectations school of deep-Lucas et al one study, improving to become the most comprehensive description of the market mode of operation, the system theory. equilibrium theory in various fields related to economics, investors act theory is an extension of a balanced market theory, equilibrium analysis is the use of in the stock market.

In 1952, the U.S. economist Harry Markowitz (HarryMarkowitz) published a report entitled <<Capital Select>> the paper, the use of revenue, variance analysis, established the efficient frontier of portfolio risk, the optimal form portfolio ideas. The theory is considered to be the earliest use of balanced thought to establish the asset management model .20 century, 60 years, Sharp (william sharpe) and Sprint (Johnlinter) and Mossy (Janmossion) in order to create portfolio-based model the capital asset pricing theory (CAPM model). The theory of general equilibrium framework of rational choice and the formation of a single investor's overall market equilibrium, with the security market line to describe the stock price formation mechanism, that is in equilibrium income securities and the risk is proportional to the relationship. investors through diversification to resolve non-systematic risk, market risk is the risk of individual securities on the system sensitivity (B value). investor risk according to the corresponding risk premium. Investment income benefits and risks of the normal and the symmetry is revealed by the equilibrium CAPM model of the real stock market. CAPM model to equilibrium, rational choice applied to the stock market, the expected return on risky assets as the market risk of risky securities determined sensitivity to systematic risk as the concept of risk analysis applied to the capital market, securities market theory is called revolution. but because of CAPM model is based on stringent assumptions, and the later economists of their validity into question. Rose (Ross1976) that the average spread in the competitive market, the risk of portfolio return and risk is not possible in the empirical determination of the mid-century, 70 .20, Ross founded the arbitrage investors pricing theory (APT model). Compared with the CAPM, ATP relaxed the assumption that the proceeds of the securities is not a factor, but several factors affect income securities with the proceeds related to a number of factors (factor model). Investment does not increase the risk in the case of the stock to find the same factors have different effects on the same investment opportunities. factor model that bear the same risk factors in the securities should have the same income, and when the prices of risky securities in a non-equilibrium state to created arbitrage opportunities, arbitrage activities will change the securities gains, stock market equilibrium.

Another theory of investor behavior analysis perspective is the efficient market theory. If we say that a balanced portfolio theory to solve the stock market in the relationship between income and risk, then another as the fulcrum of a balanced market, efficient market theory (EMH) is solve the problem of security price formation mechanism. As early as 1900, the French economist Baxielier (I ~ uisbachelier) put forward the principle of random fluctuations in commodity prices, commodity prices is the current price of its future unbiased estimates commodity prices are now equal to its expected future price of .1938, the U.S. investment theorist Williams (williams) the intrinsic value of the securities proposed future dividends discounted by the decision. The theory is that people can complete information and rational expected to determine the value of the stock, the investor reflect market information on the behavior of the British statistician Kanda Er .1959 (kendal1) found that changes in asset prices was random walk rule, future prices of securities independent of the current price, price changes is completely random, there is no specific law on weights .1970 (Fama) in the efficient market theory of the past system, based on the summary presented a complete framework for the efficient market theory, method code (Fama) to the efficient market is defined as the effective market price of securities always reflect the available information changes. Tobin that the stock market efficiency include: useful information, efficient organization, effective evaluation. that is public information, market accessibility conditions, the market prices of securities can be fully reflected. reposted elsewhere in the paper for free download http://eng.hi138.com
portfolio theory, efficient market theory constitutes a theory of the modern cornerstone of the stock market equilibrium. "rational man" and the full information of their common theoretical assumptions, a balanced market and the efficient market theory is its conclusion. but 90 years since the 20th century, with the financial markets, the various "visions" of accumulation, based on rational analysis of the equilibrium paradigm of market analysis both in theory and practice encountered challenges. First of all, a balanced market, investors are rational and assume the disclosure of information in theory, more and more economists are questioned. AndreiShleifer that the preferences of investors and consistent with the psychological concept of law is not a standard economic model. "investor psychology" is based on psychology, inspiration, rather than the concept of Bayesian rationality. Second, the empirical, Schiller (Shiller1981) found that stock volatility is not simply "price determined by the net present value of future dividends "can not be explained. Even Fama also admitted that the past gains made based on the forecast securities' and the early conclusion of the study are not consistent. precisely because there are many stock market equilibrium theory can not fully explain the phenomenon, provoked Non-equilibrium theory of the birth of the stock market. behavioral finance theory holds that the real economy and the stock market is not a complete linear relationship exists, the stock market is not always a balanced market. because investors face an uncertain future in the world, and can not ensure full reason, people only have a limited rational investment behavior characteristics, and psychological factors in investment decisions and asset pricing has an essential influence.

Second, investors, key points and practical significance of behavior theory

(A) theoretical points of investor behavior

Stock Market Equilibrium Theory of the premise and conclusions of its two parts. Approach to research is concerned, the stock market equilibrium theory of neoclassical economics and rational choice based on equilibrium analysis.

First, rational people from the economic point of view and study of human behavior: motivation in behavior, investors always seek to maximize their own interests; in behavior can be in the environment and constraints, choose the best plan of action . Therefore, the risk in a given portfolio investors are always seeking the maximum benefit under, or under the established income for minimal risk.

Second, the "market clearing" as the basis to explain the role of information and information on the market reflects investors. First, the market is open and true information, there is no "asymmetric information", and secondly, the dissemination of information channels is smooth, investors timely and accurate access to market information, and finally, investors can have sufficient knowledge and ability to analyze and judge the information obtained, there is no over-or to reflect on the information reflects the lack of.

Third, the same as neoclassical economics, equilibrium theory is established securities market system, to study the behavior of investors, or that the securities market equilibrium theory: the market mechanism is effective competition in the free market system and reasonable man, competition and choice and the benefits and risks of stock market trade-off is the formation of balanced power.

Under the premise of the established theory, theory of investor behavior have concluded that stock market is a balanced market, the characteristics of a balanced market in the following areas:
First, investors have rational choices. As a rational economic man, the investor can make a reasonable valuation of securities, given the risk in the pursuit of maximum benefit under, or under the established income for minimal risk.

Second, equity prices can reflect the value of the assets of listed companies, listed companies reflect the current and future income - cash flow changes, the stock of social capital as a platform to find the best investment opportunities, good operating performance, development prospects of the business able to raise more capital support, and investors will reap higher returns. Links http://eng.hi138.com

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