Comparative Analysis of Investment Methods and Retail Investors Based on Graham Value Investment Theory

Abstract

China's A-share market has many retail investors, and individual investors are easily affected by emotions and impulse to buy and sell, so they will be a lot of losses in the market. This paper imitates the investment model of retail investors, chases after going up trading behavior, and constructs investment strategies based on Graham's value investment theory through screening out several simple, clear, and measurable indicators, and selecting the appropriate trading cycle. Finally, in the past decade of A-shares, through back-testing, the proposed relevant strategy proves that it can get a return much higher than the return of retail investors' investment returns, inflation rates and government bond return. The sensitivity analysis of various indicators of the strategy is carried out. This paper hopes that through the analysis and comparison of the two investment methods, a better investment model can be obtained, and a stable preservation and appreciation of wealth can be realized.