How can investors understand the U.S. stock market

First, the U.S. stock market-listed companies basically cover all U.S. and even international well-known companies and enterprises, whether in the fields of energy, industry, agriculture, consumer goods and pharmaceutical, food and beverage industry, well-run companies are all listed companies in the United States. The growth of these economic entities represents the energy and trend of global economic development, so the U.S. stock has a high economic value.

Second, the changes and development of the U.S. stock markets is positively related to the world’s major political changes in the historical process; It is both a barometer of political and financial vicissitudes and the direct consequence of the change in the embodiment. This shows the transparency of the U.S. stock market and analyzability and its predictability is quite obvious.

Third, the U.S. stock market is the largest scale market, in addition to a trillion dollars in value of listed stocks, the United States has the largest investment funds and institutional investors.

Fourth, despite the sound laws and regulations of the U.S. stock market, tight and transparent management, what’s the most important thing is that it is a free market, the stock value completely freely fluctuate, in addition to the constraints of the law, the Government has absolutely no constraints against the stock market, while investors should bear all their own investment risk and responsibilities. What is worth noting is that the U.S. stock market listed companies may not be a profitable company, and even the share price of good companies may not intend to move up.

Comparison of the Chinese stock market and the U.S. stock market

1, trading hours:

China: 9:30 AM ~ 11:30 AM 13: 00PM ~ 15:00 PM    total of 4 hours

United States: Summer Time 9:30 PM ~ 4:00 AM    non-summer time 10:30 PM ~ 5:00 AM a total of

6.5 hours with extended after-hours trading

2, the transaction currency:

China: RMB, U.S. dollars, HK

United States: USD

3, the transaction unit:

China: hand ( 100 shares per hand)

United States: Unlimited, a stock will do

4, Price Change Limits:

China: 10%

United States: Unlimited

5, procedure fee:

China: 0.3 percent of the transaction amount

USA: 15 dollars each deal

6, the tax burden:

China: 0.2 percent of the transaction amount

United States: non-Americans enjoy tax-free

7, financing:

China: No

U.S.: Financing is 1 / 2 of the share price, which is 50% of the amount, no restrictions of class.

8, shorting rules:

China: Shall not be emptied below flat

United States: whether above or below, as long as the price of a transaction is higher than the

previous high prices shorting is allowed.

9, delivery regulations:

China: trade T +1, liquidation A stock T +1, B shares of T +3

United States: there is sufficient amount of money you can trade (T +0)

10, split ex:

China: trading will only be conducted after stocks are received

United States: the transaction can be conducted on the day of the spliting

11, Dividend:

China: normally paid once a year, the company will determine the amount of dividends and cash

dividends or stock dividends based on the previous year’s surplus.

U.S.: Only cash dividend, the amount of the dividend are pre-determined and paid quarterly

directly into the securities account

What is the law of mushroom management?

“Mushroom management” refers to a management mentality of organizations or individuals have dealing with new entrants. Because beginners are often placed in dark corners, ignored departments, only assigned to do some odd jobs to run errands, sometimes poured a dung by unwarranted criticism, blame, vicarious expiation. Organizations or individuals leave them to thrive or die off on their own. Beginners cannot receive necessary guidance and help. This situation is very similar to the mushroom growth scenarios.

The characteristics of policy loan

Policy loans, although called loans, in reality have essential differences from loans in the general sense. Loans in the general sense refer to the currency capitals which are provided by lenders and borrowers return in accordance with the agreed interest rate and term. But the policy loans do not establish real lending relationship between the insurance companies and policy owners. While obtaining the policy loans, policy owners do not promise a certain return of loan capitals and interest, because the policy owner get the funds from the policy’s cash value, which means, the insurance company funds must pay part of policy loans in future which policy loans enable policy owners to pay in advance.

Although the policy loans do not require the borrower to return, this kind of loans have no risks for insurance companies. Because the policy loans are based on policy’s cash value, as the cash value of insurance policies increases with the increasing of life insurance policies time limitation. And the amount of available credit increases over time, the longer the policy, the larger the amount of available credit. If the policy loan principal and interest exceeds the policy’s cash value, and the lender refuse to return, the insurance company will make the policy invalid, and will no longer bear the responsibility under the policy. Similarly, if the insured dies without returning the loan principal and interest, the insurance will deduct their loan from their death benefits. So we can see that insurance companies do not need to require lenders to repay the loan principal and interests, and can guarantee that this loan is 100% secure.

Policy loans are included in the investment in the balance sheet of the insurance company, but in actual practice, policy loans are usually completed by the customer service department but not investment department responsible for other investment projects.

What is Merger & Aquisition fund?

M & A Fund is the “high end” of PE, focusing on mergers and acquisitions of target enterprises. Its investment approach is to gain control over target companies through acquisition of target company shares and then conduct certain restructuring reform, and sell them after in possession for a certain period. The difference between M & A funds and other types of investments is that venture capital mainly invests in entrepreneurial companies, while the selection objects of M & A Fund are mature companies; other private equity investments have no interests in the control over the enterprises while M & A Funds aim at gaining control over target companies. M & A funds often appear in the MBO and MBI.

What is the risk of cashing?

Cashing risks mean the possibility of the investors selling out their investing objects at the normal prices in the capital market. Investors need to be able to withdraw and transfer their existing investments at any time, and if they can not find buyers willing to offer reasonable prices in the short term, investors will lose the other new investment opportunities, or face the loss caused by price reduction.

Cashing risk depends on the performance of capital goods in the market, and the goods which cannot be traded in the capital market are with higher risks; the risks of long-term projects are higher than these of short-term ones; the more frequently traded transactions, especially the priced security, are with stronger cashing ability. The expected return rate on investment of investors contains additional cashing rate to compensate for the risks of cashing.

Two holes of Basel II protocol

Basel Ⅱ is created to make the banking system more sensitive to risks but has also left two important holes.

The first is that the bank’s transaction accounts and loan accounts can calculate capital in different ways. This mechanism encourages banks to hold a large number of positions, such as bonds, foreign exchange in more liquid assets, which since 2000 have gradually increased holdings of structured products. However, this accounts proposing approach met some problems in the financial crisis, for example, Goldman Sachs.

Second, the BaselⅡ lacks concerns over asset mobility. Although the BaselⅡrequires the bank regulatory framework to be based on three pillars, such as capital adequacy requirements, government regulation and market disciplines, but these principles do not sufficiently emphasize their role of banks in risk control. Thus, BaselⅡ only underlines the capital but not the mobility. This model leads to a chronic shortage of awareness of risks in bank market for assets mobility.

What is the World Economic Forum?

World Economic Forum-WEF is an independent international non-government organization based in Geneva, Switzerland. Because the annual meeting is held in the eastern Swiss town of Davos each year in January, it is also known as the “Davos Forum.” The participants include the high-level political and business leaders, business leaders and renowned scholars of various countries. Davos forum is known as “the most senior non-international economic forum”, and is the major non-official gathering occasion where the world’s all major leaders discuss the global sensitive issues. Its members include the Global 1000 companies, and these multinational companies control more than 85% of global wealth, total annual turnover of them are more than 45 trillion U.S. dollars. The forum’s aim is to explore the existing problems of the world economy and promote international economic cooperation and communications, and the annual meeting will mainly discuss the global hot issues or trend issues, and is an important window to observe new achievements, new theories and new trend of world economy, having an important impact on the development of the world economy. According to the World Economic Forum Organization, the winter Davos in Switzerland is the dialogue between global top 500 companies with governments of various countries and regions.

What is Big Mac index?

Big Mac index is an informal economic index, used to measure and determine if the exchange rate of these two currencies is reasonable in theory. This measurement method assumes that purchasing power parity theory is correct.

The premise of purchasing power parity is that exchange rate for the two currencies naturally adjusts to one level, so that the prices of one basket of goods for the two currencies are the same (Law of One Price). In the Big Mac index, the one “basket” of goods are the Big Mac hamburger sold in a fast-food chain McDonald’s. The reason to choose the Big Mac is that the Big Mac is available in various countries, and the sizes of it are the same in various countries, and the local McDonald’s distributor are responsible for the material bargaining. These factors enable this index to meaningfully compare currencies of various nations.

The way to calculate the Big Mac purchasing power parity exchange rate is that a country’s Big Mac price in local currency is divided by the local currency price of Big Mac in another country. The quotient is used to compare with the actual exchange rate; if the quotient is lower than the exchange rate, it means the exchange rate of the first country’s currency is undervalued (based on purchasing power parity theory); on the contrary, if the quotient is higher than the exchange rate, then the first currency exchange rate is overvalued.

What is the Industrial Investment Fund？

Industry Investment Fund a broad concept, often referred to as venture capital funds and private equity investment funds, generally meaning the investment in the equity or pre-equity of non-listed companies with high growth potential and participation in the management of the invested enterprise in order to achieve capital appreciation through equity transfer in anticipation of the invested enterprise maturing. Depending on the different stages that target companies, Industry Investment Fund can be divided into the seed industry funds or early funds, growth funds, restructuring funds.