An Empirical Analysis of Selecting Common Stocks by Using the Simplicity Method of 「543」

• Main Authors: Min-Chih Kao, 高敏芝
• Other Authors: Yao-hsien Lee
• Format: Others
• Language: zh-TW
• Published: 2013
• Online Access: http://ndltd.ncl.edu.tw/handle/66193159878344671256

碩士 === 中華大學 === 企業管理學系碩士班 === 101 === This study applies Xie (2012) ”the magic of 543 stock selection rule” and uses a simplified investment method to setup stocks selection criteria. The sample data period is from 2002 to 2011. In the first stage, the study uses five stock selection criteria including return on assets, return on equity, gross profit margin, cash dividend ratio, and dividend payout ratio. In the second stage, the study uses four selection criteria including price-earnings ratio, price-book ratio, debt ratio and beta as filter conditions. Finally, the study considers three factors including monopoly, the biggest, and the unique to analyze the individual stock. The study obtains the following results: 1.The "high 5" stock selection strategies have the best performance in holding three years investment. 2.The "low 4" stock selection strategies have the best overall return on investment in holding three months, six months, one year and two years. 3.As to the investment performance for three years , "high 5", "low 4", combined with "high 5" and "low 4" have better cumulated investment return rate than that of the market’s weighted index . 4.Applying the industry’s unique characteristics analysis, the study finds that both tourism industry and telecommunications services industry are less affected by the impacts of the global economic cycle. Therefore, if investors want to make a long-term investment, the two industries can be taken into account as the investment choices. 5.Using a simplified investment rule and 543 stock picking strategies, the study finds that the "low 4" stock selection strategy emphasizes on technical analysis, and the "high 5" stock picking strategy can quickly responses to market fluctuations and then has a better performance. Therefore, investors must pay attention to industry changes and market fluctuations such that they can make an appropriate investment strategy. In addition, they should annually review their portfolios and make appropriately asset adjustments.