Chapter v: managing wealth alchemistry: the recipe for world investment masters
The golden dividing line theory: the magic number
Gold partition is an old mathematical method, and in the securities market, the fine use of gold partition cuts across almost the entire field of technical analysis and is the set of numbers most commonly cited by traders and market analysts。
The gold partition rate (0. 61803398...) is an unreasonable number of infinity that affects all aspects of our lives, not only in mathematics, but also in architecture, aesthetics, art, military, music and even investment。
The most basic method used for the gold partition rate is to divide 1 into 0. 618 and 0. 382 and to derive a set of values related to the gold partition rate, namely 0, 0. 382, 0. 5, 0. 618 and 1. A parallel line consisting of 0, 0. 382, 0. 5, 0. 618 and 1 passing through is called the gold split。
In the price projections for portfolio investments, there are two methods of split analysis of gold。
The most important peaks or bottoms in recent trends in securities prices, i. E. The most important highs or lows, are the basis for measuring future trends. When securities rise, the price of securities at the bottom is the base, and increases are more likely to be pressured to reach a given gold ratio。
2. After the movement of the line, whether it is a reversal of the downward spiral or a reversal of the downward spiral, as measured by an increase between the most important peaks or the bottom of the recent trend, the original drop is divided into five gold points at 0. 191, 0. 382, 0. 5, 0. 618 and 0. 809. Inversely, the movement of securities prices may encounter temporary resistance or support at these gold points。
In many cases, the ratio of gold partitioning is applied to the stock market and is used in large-scale studies with greater effectiveness than in individual shares。
However, the mythical figure of the ratio of gold is not based on theory, so it is a coincidence that there are criticisms of superstitions, but nature is full of wonderful coincidences and has been difficult to justify。
Arbitrage pricing: how securities are priced
The arbitrage pricing theory argues that some risks in the economic system cannot be dispersed through diversified investment。
The arbitrage pricing theory is a balanced model used to study how securities prices are determined. It assumes that the returns on securities are determined by a range of industrial and market factors。
Apt is a new method for describing mechanisms for capital asset price formation based on price patterns: in a balanced market, two commodities of the same nature cannot be sold at different prices。
The arbitrage pricing theory defines arbitrage as balanced, does not require the existence of market portfolios and requires fewer and more rational assumptions than the capital asset pricing model (capm model)。
The arbitrage pricing theory assumes that:
Investors share the same investment philosophy。
Investors avoid risk and maximize effectiveness。
3. Markets are safe。
The arbitrage pricing theory is based on a multifactor model of the rate of return formation process, which considers that the rate of return on securities is related to a group of factors that represent some of the underlying factors of the rate of return on securities。
Arbitrage pricing theory, together with modern portfolio theory, capital asset pricing models, options pricing models, etc., form the theoretical basis of modern finance。
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