4 thoughts on “It is said that the financial management "don't put eggs in a basket". What does this mean?”
Bruce
Friends with a little financial management experience are not unfamiliar to the phrase "Don't put eggs in a basket". This sentence is essentially the principle of risk decentralization in investment, which was proposed by the 1981 Nobel Prize winner James Tobin. Speaking of James Tobin, he and China still have some relationships. In 1985, Tobin was invited by China to attend the famous Bashan Wheel Conference. On this luxury cruise ship from Chongqing to Wuhan, Tobin discussed with the leaders and scholars in charge of the economy at the time to discuss domestic inflation solutions. Tobin (left) and noble full
This proposed "Don't put eggs in a basket", which originated from the "asset portfolio selection theory" he proposed. In short, It is to combine investment products with different levels of risk to reduce the overall risk of investment and keep the return on investment at a reasonable level. . In addition, Tobin's other achievement is to propose "Tobin Q ratio". The molecular of the Q ratio is the company's market value, and the denominator is the cost of rebuilding the company, that is, the cost of resetting. If the q ratio is u003C1, it means that if you want to expand the size of the company or expand the production, the best choice to acquire other companies; if the ratio is> 1, a company should be rebuilt. Tobbin Q has a wide range of applications in the field of investment and financing, and the company's mergers and acquisitions. I won't go into details here. Tobin models and three types of risk preferences have theoretical foundation in order to allow decentralized investment decisions, Tobin created a "Tobin model". The goal of this model is to maximize the asset portfolio of investors. Tobbin simplifies the preservation of assets into two categories, one is currency, and the other is bonds. The holding currency is basically no income, but there is basically no risk, so currency is the representative of security assets; holding bonds can get interest income, but to bear market risks, so bonds are risk assets representative.
In reality, many people (families or enterprises) will hold these two assets to weigh risks and income, but the question is how people determine the ratio of the two? Tobin believes that this depends on investors' three categories of risks. The first category is risk evasion. Such investors pay great attention to the safety of assets, do not care about income, but just avoid risks as much as possible. The second category is risk preferences. They are willing to bear risks and hope to get excess returns that match risks. The third category is risk -neutral. In this part of investors, under certain security of assets, they can bear certain risks and hope to obtain a matching income. we will hold a lot of currencies at the beginning, that is, becoming the first type of investor. In order to earn income, we began to disperse the currency in our hands, investing in risk assets, and then became the third type of investors. Is with the increase in the negative impact of risks, and even offset the positive income obtained by the venture capital, investors will stop increasing the allocation of risk assets, and the distribution of the entire asset portfolio will reach balanced equilibrium. Status -Tobin's model explains such a mechanism for venture capital. Stocks should the eggs be placed in a basket? We understand the classification of risks, and we also understand the principle of "do not put eggs in a basket", but the next question is: How many piles of eggs should be placed in a basket? In other words, what extent do our investment be scattered to maximize the asset income? For this issue, economists have no conclusion so far. Because in the final analysis, this is a question determined by risk preferences, and everyone's risk preferences are different. If the investment is scattered, that is, the basket is too small, it may not be able to effectively hedge the risk; if the investment is too scattered, there are too many baskets, and various investment risks and income will be disappeared with each other. , Lost dispersed significance. It here I want to share the story of a stock god Buffett, maybe everyone will inspire the investment portfolio. 2007, Buffett set up a well -known "gambling". He bet in the next ten years, even the fund investment portfolio designed by a professional hedge fund manager, it cannot exceed the performance of the US S
That is to say, the type of investment must be diversified, and the configuration ratio must be appropriate. For example, stock funds, bond funds, gold, and wealth management products can be invested a little, so that the risks can be scattered.
It is said that the wealth management "do not put eggs in a basket", which is a metaphor. Compare money to eggs and the fund to basket. If the "basket" breaks, the "egg" will be broken, and the bamboo basket will be empty. Therefore, the "basket" side must not be overwhelmed by the whole army.
Friends with a little financial management experience are not unfamiliar to the phrase "Don't put eggs in a basket". This sentence is essentially the principle of risk decentralization in investment, which was proposed by the 1981 Nobel Prize winner James Tobin.
Speaking of James Tobin, he and China still have some relationships. In 1985, Tobin was invited by China to attend the famous Bashan Wheel Conference. On this luxury cruise ship from Chongqing to Wuhan, Tobin discussed with the leaders and scholars in charge of the economy at the time to discuss domestic inflation solutions.
Tobin (left) and noble full
This proposed "Don't put eggs in a basket", which originated from the "asset portfolio selection theory" he proposed. In short, It is to combine investment products with different levels of risk to reduce the overall risk of investment and keep the return on investment at a reasonable level.
. In addition, Tobin's other achievement is to propose "Tobin Q ratio". The molecular of the Q ratio is the company's market value, and the denominator is the cost of rebuilding the company, that is, the cost of resetting.
If the q ratio is u003C1, it means that if you want to expand the size of the company or expand the production, the best choice to acquire other companies; if the ratio is> 1, a company should be rebuilt.
Tobbin Q has a wide range of applications in the field of investment and financing, and the company's mergers and acquisitions. I won't go into details here.
Tobin models and three types of risk preferences have theoretical foundation in order to allow decentralized investment decisions, Tobin created a "Tobin model". The goal of this model is to maximize the asset portfolio of investors.
Tobbin simplifies the preservation of assets into two categories, one is currency, and the other is bonds.
The holding currency is basically no income, but there is basically no risk, so currency is the representative of security assets; holding bonds can get interest income, but to bear market risks, so bonds are risk assets representative.
In reality, many people (families or enterprises) will hold these two assets to weigh risks and income, but the question is how people determine the ratio of the two? Tobin believes that this depends on investors' three categories of risks.
The first category is risk evasion. Such investors pay great attention to the safety of assets, do not care about income, but just avoid risks as much as possible.
The second category is risk preferences. They are willing to bear risks and hope to get excess returns that match risks.
The third category is risk -neutral. In this part of investors, under certain security of assets, they can bear certain risks and hope to obtain a matching income.
we will hold a lot of currencies at the beginning, that is, becoming the first type of investor. In order to earn income, we began to disperse the currency in our hands, investing in risk assets, and then became the third type of investors.
Is with the increase in the negative impact of risks, and even offset the positive income obtained by the venture capital, investors will stop increasing the allocation of risk assets, and the distribution of the entire asset portfolio will reach balanced equilibrium. Status -Tobin's model explains such a mechanism for venture capital.
Stocks should the eggs be placed in a basket? We understand the classification of risks, and we also understand the principle of "do not put eggs in a basket", but the next question is: How many piles of eggs should be placed in a basket?
In other words, what extent do our investment be scattered to maximize the asset income?
For this issue, economists have no conclusion so far. Because in the final analysis, this is a question determined by risk preferences, and everyone's risk preferences are different.
If the investment is scattered, that is, the basket is too small, it may not be able to effectively hedge the risk; if the investment is too scattered, there are too many baskets, and various investment risks and income will be disappeared with each other. , Lost dispersed significance.
It here I want to share the story of a stock god Buffett, maybe everyone will inspire the investment portfolio.
2007, Buffett set up a well -known "gambling". He bet in the next ten years, even the fund investment portfolio designed by a professional hedge fund manager, it cannot exceed the performance of the US S
That is to say, the type of investment must be diversified, and the configuration ratio must be appropriate. For example, stock funds, bond funds, gold, and wealth management products can be invested a little, so that the risks can be scattered.
It is said that the wealth management "do not put eggs in a basket", which is a metaphor. Compare money to eggs and the fund to basket. If the "basket" breaks, the "egg" will be broken, and the bamboo basket will be empty. Therefore, the "basket" side must not be overwhelmed by the whole army.
This risk is high. If all wealth management is placed in the same industry, then it will make a loss together, and the risk will be great.