Security Investment Science (21st Century Economics and Management Series Textbooks)

Author: Hu Changsheng, Xiong Heping, et al.
Publisher:
Publish Date: 2002-02-14
Features: Securities Investment is an applied economic discipline based on numerous disciplines, specializing in the study of people's securities investment activities and their underlying principles. With the evolution of investment practices, securities investment theory in the West has developed over four centuries. According to the widely accepted division, securities investment theory has undergone three stages of development.
Stage 1: The (Budding Stage) of Securities Investment Theory (17th century to the end of the 19th century). During this stage, the regulations for stock and bond trading were relatively small, insufficient to influence the economic operations of a country or region. Both governments and the public paid insufficient attention to securities trading activities, and there was a lack of effective, standardized constraints on securities trading. Individuals engaged in securities investment relied solely on experience and intuition to decide on buying and selling targets and timing. Although various investment adages were summarized from investment practices, such as "Don't put all your eggs in one basket," "When to trade is more important than what to trade," "Buy what others are selling and sell what others are buying," "Cut losses when necessary," and "You can make money in both bull and bear markets, but only timidly greedy people can never make money." These adages still hold some guiding significance today, but they remain merely empirical rules derived from human experience and have not yet risen to a systematic investment theory.
Stage 2: The Formation Stage of Securities Investment Theory (Late 19th century to the mid-20th century). During this stage, Western securities markets experienced a cycle of expansion, collapse, recovery, and renewed prosperity. The fluctuations in securities markets had a severe impact on a country's economy, and Western governments began to realize that the unregulated liberalization of the securities investment industry was highly destructive. They had to strictly regulate the market order of securities investment, and various countries formulated a series of laws.
Stage 3: The Mature Stage of Western Investment Theory Development. Through long-term accumulation of experience and knowledge, as well as dedicated research by numerous experts and scholars, Western investment theory underwent a profound scientific revolution starting in the 1950s. This scientific revolution in investment theory was first pioneered by Harry Markowitz of the United States with the development of Portfolio Selection Theory. This theory possessed considerable explanatory power for a series of mysteries in the securities market and held significant scientific and practical value, thereby sparking great interest among both the investment theory community and the financial industry.