On The Formulation of Long-Investment strategy for Taiwan Stock Market— Case Study for Life Insurance

• Main Authors: Yu-Shien Lee, 李郁憲
• Other Authors: 李賢源
• Format: Others
• Language: zh-TW
• Published: 2013
• Online Access: http://ndltd.ncl.edu.tw/handle/07115455363118130295

碩士 === 國立臺灣大學 === 企業管理碩士專班 === 101 === The purpose of this study is to formulate a process of long-term investment on stocks for a life insurance company in Taiwan. The process explains the key factors of stocks investment are timing and valuation. Considering the TWSE’s volatility, the better investment timing is when the TSEC index is below the moving average with 10 years. On the other hand, the better price level for long-term investment could be approached by the Gordon Pricing Model and the position of historical price range. As empirical results of this study have shown, when the TSEC index is on the level of 5,000, it is a good timing for long-term investment on stocks. Even though the existing positions were underwater, at this point, it had better not be fire sold rather than additionally increase the investment in order to reduce the average holding cost and raise up the probability of getting profit when the market will reverse. By virtue of this fact, Lifers’ fund managers should add more cyclical stocks when the TSEC index is below 5,000. If Lifers can manage funds in this way, they will not only be able to catch the profit from long-term point of view, but also stabilize the stock market which is beneficial to the economy and the market. This study empirically demonstrates the inverse relationship between the investment horizon and the averaged profit and loss; in other words, the longer the investment horizon is, the less the average loss will be. So, Lifers should extend their investment horizons and additionally increase positions instead of fire selling when the good price level appears. Lifers should avoid the herd behavior whatever the stock market is either bullish or bearish.