金融英语论文

1、the primary message for people who are interested to invest in the stock market is that they should ignore markettiming and buy stocks for the long term. this strategy is simple and yet effective because stocks give good returns over a long period of time. this article will highlight strategies on h

2、ow to allocate their money which could prove to be useful for investors between savings and stocks.the most simple strategy is the buy-&-hold strategy. onedoes not need to do anything no matter what happens afterthe initial investment is made. for example, you have $100and you then decide to keep $6

3、0 in savings and use theremaining $40 to buy stocks. whether the stock market goesup or down, you do not use your savings to buy more stocksor sell stocks to put money back into savings.if you follow this strategy strictly, it gives youdownside protection because your wealth will not fall below$60.

4、at the same time, it still gives you unlimited upsidepotential because of the $40 that you have invested instocks. given that stocks in general will give you higherreturns than savings in the long run, this is why many fundmanagers advise investors to put a significant portion oftheir wealth in stoc

5、ks and hold on to them.another commonly mentioned strategy is the constant mixstrategy. in this case, you maintain a constant percentageof your wealth in stocks. to use the same example, youinitially put $60 in savings (60%) and $40 in stocks (40%).if the stock market falls by 20%, your initial $40i

6、nvestment is now worth $32 and your wealth has dropped to$92, i.e. $60 in savings (65%) and $32 in stocks (35%). notethat your percentage in stocks has fallen from 40% to 35%.in order to maintain your initial 40%, you have to use yoursavings to buy more stocks. this strategy requires you tobuy stock

7、s when their prices fall and sell stocks when theirprices rise. put simply, it is a strategy that forces you tofollow, the rule of buy low and sell high.while the constant mix strategy seems to be the beststrategy to follow, the buy-and-hold strategy is betterunder certain situations. for example, t

8、he market isoscillating up or down, the buy-and hold strategy, rewardsyou better. therefore, if you believe that the stock marketis on a long-term uptrend, the constant mix strategy is nota good one to follow. however, the constant mix strategy isvery useful in a flat but oscillating market. for exa

9、mple,you buy more stocks when the market drops and you sell themfor profits when the prices recover. this strategy takesadvantage of the up and down cycles in a market that isgoing nowhere.the third strategy is the constant proportion strategy.basically, the strategy requires the investor to maintai

10、n anexposure to stocks based on a multiple of the amount he iswilling to risk. it follows a formula like this :dollars invested in stocks = mx(present wealth - floor) where m 1the floor is the level of wealth where the investor cannottolerate risky investment and is not willing to put any acent in s

11、tocks. for example, the investor needs $60 (floor)for retirement and is not willing to risk this amount in anyinvestment. his present wealth is $100., assume that m=2, hewill invest 2x($100-60) or $80 in stocks and save $20. ifthe market drops by 10%, his stock investment will be worth$72 and his to

12、tal wealth will be $92 ($72 stocks and $20savings). based on the formula, his stock investment shouldbe reduced to 2x($92-$60)or $64. thus, he has to sell $8worth of stocks and put the money into savings.in essence, you sell stocks as they fall and buy stocks asthey rise (many like to put it as buy

13、high and sellhigher). while this contradicts the convention of buy lowand sell high, it is a strategy that is very suitable fortrending market. the strategy also gives downside protectionbecause when the investors wealth drops to the floor, itrequires him to keep all his money in savings.because it

14、forces investors to get out of stocks as themarket falls, investors enjoy some downside protection. theconstant mix strategy is a form of buy low/sell highstrategy which is good for a market caught in a tradingrange. as the strategy recommends buying more stocks as theyfall, there is no downside pro

15、tection for investors.unfortunately, many investors do not have any idea whichpart of the market cycle they are in. thus the in-betweenbuy & hold strategy seems the most appropriate and simple.it is also the one with the lowest transaction costs.there is no reason to believe that any of the strategiesis best without considering the individuals require