A Share Market Returns Undervalued "Fool" Investment Exceeds Buffett

The Shanghai Composite Index underestimated the true return on investment in the A share market.

The Shanghai Stock Exchange officially opened in December 19, 1990. At that time, A shares had only 8 stocks. After 25 years of development, there are 2923 listed companies in the A share market.

During the period, the Shanghai composite index increased by 29 times, with an annual increase of 14% and A shares in the same period.

Weighted) increased by 74 times, with an annual increase of 18.2%.

The Shanghai Composite Index underestimated the real return on investment in the A share market. This is because, first, the small and medium value companies are more likely to get higher gains from shell value and M & A advantages, but the Shanghai composite index is mostly blue chips with large market capitalization.

Taking the current constituent stocks as an example, the average and median value of their total market capitalization are 25 billion 800 million yuan and 8 billion 900 million yuan respectively, while the current A share market capitalization average value and median value are 17 billion 700 million yuan and 8 billion 200 million yuan respectively; second, the Shanghai Composite index does not consider the dividend income when the index is compiled.

Taking 1119 constituent stocks at the end of 2015 as an example, 761 of them were paid dividends within the year, and the average annual dividend yield was 43.2%.

At present, institutional investors who participate in the A share market mainly include public offering, private placement, insurance, social security, securities dealers, trusts and so on. As private equity funds and trust products are not disclosed, we mainly discuss the return on investment of the other four types of institutional investors.

The annual yield of the public offering fund from 2005 to 2015 is about 16.8%, higher than that of the Shanghai Composite Index during the same period, which is slightly lower than that of A shares (the market value of the stock market) increased by 19.3% over the past year.

The yield of the public offering fund is more stable than that of the A share market. From 2005 to 2015, the public offering fund gained absolute positive gains in 8 years, while the A share market only gained positive returns in 6 years.

The annual yield of the social security fund from 2008 to 2015 was 6.6%, while the Shanghai composite index increased by -4.8% during the same period, and the A share (market capitalization weighted) increased by 2.3% annually.

In general, the social security fund yield is more stable. In the past 8 years, the investment in social security funds has been more stable.

In 2008, only slightly down in 2008, there was an absolute positive return in other years, while half of the A share market yield fell during the same period.

The annualized yield of insurance management from 2010 to 2015 was about 7.1%, while the Shanghai composite index increased by 1.3% during the same period, and the A share (value of circulation market value) increased by 6.2% annually.

In the past 6 years, the return on investment in insurance assets and equity has only dropped slightly in 2012, and there has been an absolute positive return in other years. In the same period, the A share market fell in 2011 and 2013.

The annual yield of broker dealer management was 17.3% from 2010 to 2015, while the Shanghai composite index increased by 1.3% during the same period, and the A share (circulation market value weighted) increased by 6.2% annually.

Compared with the above three types of investors, the return rate of securities firms' capital management is even greater. In the past 6 years, the investment return rate of equity investment in securities companies declined in 2012 and 2013, while the A share market fell in 2011 and 2013.

A shares "fool" investment yield over Buffett.

For further measurement

The real yield, we calculate the A share market yield by the two caliber.

Caliber 1: all A shares purchased at the beginning of each year are equal to 576 times the share of A shares, and the annual increase is 28%; the caliber is two: all A shares are bought at the beginning of each year, and the A share is increased by 256 times, and the annual increase is 24%.

Considering the worst case scenario, at all four historical highs (2245 points in 2001, 6124 in 2007, 3478 in 2009 and 5178 in 2015), all A shares were purchased equal to 168%, 105%, 128% and -22% respectively. The total yield of all A shares purchased was 176%, 58%, 98% and -35% respectively.

It can be seen that although the larger decline in the short-term market will erode investment returns, the investment return rate of the A share market is relatively large in the longer term, and the yield of A shares equal and equal investment has exceeded the historical yield of Buffett 21%.

Of course, the structure of investors based on general investors determines the volatility of the A share market. The standard deviation coefficient (standard deviation / mean) of Shanghai Composite Index's monthly rise and fall is 8 from the Shanghai Stock Exchange's opening up to now. The same time, the S & P 500 and Dow are 5.9 and 5.7 respectively. Obviously, A share investors need more patience to get a huge return on investment.