Sunday, January 29, 2017

Enya - China Roses

Economic Wheel – Stock Market - Sentry Theory 经济之轮 - 股票市场 - 哨兵理论

Economic Wheel – Stock Market - Sentry Theory

经济之轮 - 股票市场 - 哨兵理论

In this paper, the author proposed the Sentry Theory, analyzed the determination property of the theoretical price and the uncertainty property of the actual transaction price of the listed company in-depth, and applied Beizhan business valuation model to determine the theoretical price of the listed company. Sentry theory further sets out sentinel value ​​(maximum and minimum value) for the theoretical price of the listed company and analyzed the out of price scope problem. Sentry theory will minimize the unfairness and injustice in the stock market, eliminate the stock market bubbles as much as possible, reduce the financial risk of the listed company to the greatest extent, so as to perfect the existing stock market management mechanism and reduce the emergence probability of financial crisis, and began to realize the rational prosperity.

1.      Introduction

Robert Schiller
, the world-renowned economist, stated in his book <<Irrational Exuberance>>, "stock market pricing has not yet formulated to be a perfect science"[1]. So, how do we achieve rational prosperity, how do we achieve the scientific nature of stock pricing? Of course, the rational prosperity of the stock market shall also include the suppression of random factors. Here I would like to propose the sentry theory, and apply Beizhan business valuation model to determine the theoretical price of the listed company to determine, and further propose the sentinel value of the theoretical price of listed company (maximum and minimum value), so as to take a solid step for achieving rational prosperity.

2. The Value and Price of Listed Company

2.1. Market Value of Listed Company

The market value of a listed company refers to the total market value of the shares issued by a listed company based on the market price, which is calculated by multiplying the market price of each share by the number of shares issued. [2]

2.2. Stock Price of Listed Company

The stock price of a listed company is the price at which the shares are traded on the stock market. The stock price is divided into the theoretical price and the market price. The theoretical price of the stock is not equal to the market price of the stock. There is a considerable gap between the two. [3]

2.3. Valuation Value of Listed Company

The valuation value of a listed company should have the same connotation as the valuation value of a non-listed company, which can be defined as the value of a listed company valued with Beizhan business valuation model.

2.4. The Theoretical Price of Listed Company

The theoretical price of listed company is the market value of a listed company calculated based on the theoretical price of its stock. The theoretical price of a listed company's stock should be the valuation value of each stock after the valuation value of the listed company is equally shared by the issued stock shares. Therefore, the theoretical price of listed company is the value of its valuation value.

3. Beizhan Business Valuation Model

3.1. Beizhan Business Valuation Model

Beizhan business valuation model
is the fact plus growth model. The fact part is the valuation based on the current resource characteristics and current profit characteristics of a business. The growth part is the valuation on the profit growth characteristics and resource expansion characteristics of a business. [4]

3.2. Coherence between Stock Price Fluctuation Factors and Beizhan Business Valuation Model

Since the theoretical price of a listed company is its valuation value, which is the value of the listed company valuated with the unified Beizhan business valuation model, so fluctuation of the stock price of the listed company should be consistent with Beizhan business valuation model. That is to say that the fluctuated stock price of listed companies shall also be able to be calculated with Beizhan business valuation model, that is, the theoretical calculability of the instantaneous stock price of a listed company. Now we analyze such consistency as follows [5] [6] [7]:

3.2.1. Factors Consistent with the Fact Part Valuation

New Products – Current Core Resources
Higher-than-expected earnings – Current Profit
Policy Resources - Strength Value
Human Resources - Current Core Resources

3.2.2. Factors Consistent with the Growth Part Valuation

Expected Growth - Profit Growth
Policy Resources - Profit Growth
Market Competition - Profit Growth
Macroeconomic Situation - Profit Growth
Market Political Ecology - Profit Growth

(When the above factors change, they can be valued in accordance with the fact part valuation)

3.2.3. Other Factors

The following factors are mostly psychological factors of stock transaction, mainly affecting the transaction price of listed company, and can not determine the theoretical price of listed company:

  • Investor sentiment
  • Takeover offer
  • Litigation (there is a realistic calculation of the cost, so this factor is partly a part of the fact part valuation)
  • Transaction agents

4. Sentry Theory

Sentry theory is a theory to limit the scope of the theoretical price fluctuation of a listed company based on Beizhan business valuation model. Of course, this theory also applies to non-listed companies.

4.1. Determination of the Share Price of the Listed Company

4.1.1. The Theoretical Price of Stock of Listed Company

The theoretical price of a listed company's stock is defined in 2.4. The instantaneous price of the theoretical price of listed company’s stock due to fluctuation factors can be calculated, but it is unrealistic, and is not necessary.

4.1.2. The Transaction Price of Stock of Listed Company

Because there are many uncertain factors in the stock trading, the transaction price of the stock of listed company is inconsistent with the theoretical price. These uncertainty factors are mainly due to the randomness of the transaction, speculativeness, temporalness, competitiveness, and so on. Trader's psychological factor is also an uncertain factor.

4.2. Determination of Stock Price Scope

At a certain moment, the theoretical price of a listed company should be the only, but the transaction price may not be consistent with its theoretical price. A listed company's stock price should be in a scope, at least in theory; this scope is the maximum and minimum value of the transaction stock price of a listed company, that is, sentinel value. As the value of a listed company is dynamically changed in the market competition, therefore, at different moments, a listed company's sentinel value is also dynamically changed.

4.2.1. The Maximum Value of the Transaction Stock Price

The maximum value of the transaction stock price of the listed
company can be defined as the theoretical price of the listed company at a certain valuation moment. In other words, the maximum transaction stock price of a listed company is its theoretical price.

4.2.2. The Minimum Value of the Transaction Stock Price

The minimum value of the transaction stock price of the listed company
can be defined as the value of the fact part valuation in the theoretical price of the listed company at a certain moment. That is to say that a listed company's minimum transaction price can not be less than the value of the fact part valuation.

4.2.3. Out of Price Scope Management

In real transactions, a listed company's transaction stock price may break above mentioned scope of the maximum and minimum value scope, this is the out of the price scope issue, the stock trading over the maximum value of transaction stock price is the manifestation of the stock market bubble, the stock trading breaking the minimum value of the transaction stock price is the manifestation of the loss of entrepreneur’s core asset. So it is necessary to manage the out of the price scope issue. Here two levels of management can be conducted, the first level is transaction management within the scope of the sentinel values, which is the normal transaction management; one is the transaction management outside the scope of the sentinel values. Transaction outside the sentinel values is generally not allowed, the specific approaches can be further explored by the financial regulatory authorities. Such as voluntary, undisclosed, restricted transactions, and so on.

4.3. Summary

Sentry theory provides a theoretical foundation for out of price scope management, eliminating the stock market bubbles and preventing financial risks. Sentry theory minimizes the interference of random factors on stock trading to the max degree and increases the certainty of valuation.

5. Similar Concepts

In the theories of security market, there are several theories similar to sentry theory, here the author simply introduce them in order to show the differences:

5.1. Box Theory

Box theory is a theory proposed by American Nicolas Darvas according to his security market practice. "Nicolas Darvas thinks stock prices generally fluctuate within a certain range, creating a box of stock prices for fluctuation. When the stock price slips down to the bottom of the box, it will be supported by buying; when the stock price rises to the top of the box, it will be under pressure to selling. Once the stock price effectively break the top or bottom of the original box, the stock price will enter a new stock box to run, the top or bottom of the original stock will become the important support level and pressure level. Therefore, as long as the stock price rose and rushed to another box imagined by your heart, you should buy; in the other hand, you should sell." [8]

5.2. Price Change Limitation

Price change limitation is the transaction restriction measure implemented when the transaction price of a listed company in the stock market changed out of a certain range in a day. This kind practice of stock market management is very common in China and in many other countries around the world. [9]

5.3. Fusing Mechanism

"Fusing refers to stopping the transaction in a full day or within a specified period of time when the market price changes touch a specified range. That is to say, the exchange market does not accept orders which is over the rising price limit and below the falling price limit, and fusing is just the temporary fluctuation restriction before this maximum fluctuation limitation, fusing has a certain activation condition.[10] This is the current fusing mechanism.

5.4. Differences

Box theory is a kind empirical theory proposed based on the stock market trading activities; it is a technical observation on the outside manifestation of the stock price. The similarity with the sentry theory I proposed is inevitable, and this kind similarity just proves the correctness of my sentry theory.

Change limitation and fusing mechanism all are security market regulatory mechanisms, such regulatory mechanisms are implemented for the protection of investors’ interests and stable market, is purely implemented for human’s needs. Such regulatory measures lack the support of theoretical foundation, and the sentry theory precisely provides the necessary theoretical foundation for them. Fusing mechanism is almost exactly the same with the out of scope price management I my proposed.

6. Significances

Sentry theory has laid a theoretical foundation for the calculability of the instantaneous stock price of listed company, which lays a theoretical foundation for the calculability of stock market bubble, and provides the necessary theoretical foundation for the implementation of financial regulatory measures. Sentry theory can completely eliminate the collapse crisis, the financial crisis, and the completely realize the rationality and stability of financial market, achieve the rational prosperity we desired.

作者在本论文中提出了哨兵理论,对上市公司的理论价格的确定性和实际成交价的不确定性进行了深入的分析,并将备战商业评估模式应用于上市公司理论价格 的确定。哨兵理论进一步提出了上市公司理论价格的哨兵值(最大值和最小值),并分析了溢价的问题。哨兵理论将最大可能地减少股票市场中的不公平和不公正性,最大可能地彻底消除股市泡沫,最大可能地减少上市公司的金融风险,从而完善现有的股票市场管理机制,降低金融危机所出现的几率,并开始实现理性化的繁荣。

1.   前言

世界著名的经济学家罗伯特席勒在其著作《非理性繁荣》中提到说“股市定价并未形成一门完美的科学[1] 。那么,我们如何实现理性的繁荣,我们如何实现股票定价的科学性呢?当然股票市场理性的繁荣还应当包括对于随机因素的抑制。这里我提出哨兵理论,并将备战商业评估模式应用于上市公司理论价格的确定,并进一步提出了上市公司理论价格的哨兵值(最大值和最小值),从而为实现理性的繁荣迈出坚实的一步。

2.   上市公司的价值与价格

2.1.      上市公司的市值


2.2.      上市公司的股票价格


2.3.      上市公司的评估价值


2.4.      上市公司的理论价格


3.   备战商业评估模式

3.1.      备战商业评估模式


3.2.      股价波动因素与备战商业评估模式的一致性


3.2.1.                     与事实部分评估相一致的因素

新产品 现实核心资源
高于预期的盈利 现实盈利状况
政策资源 力量价值
人力资源 现实核心资源

3.2.2.                     与增长部分评估相一致的因素

预期的增长 盈利增长状况
政策资源 - 盈利增长状况
市场竞争形态 - 盈利增长状况
   宏观经济现状 - 盈利增长状况
市场政治生态 - 盈利增长状况


3.2.3.                     其他因素


·         投资者情绪
·         收购要约
·         法律诉讼(这里有一定的现实成本的计算,因此,这一因素部分地属于事实部分的评估)
·         交易代理

4.   哨兵理论


4.1.      上市公司股价的确定

4.1.1.                     上市公司股票的理论价格


4.1.2.                     上市公司股票的成交价格

由于在股票交易中,存在有许多不确定性的因素,上市公司股票的成交价格同理论价格是不一致的。 这些不确定的因素主要来自于交易的随机性,投机性,时间性,竞争性,等等。交易者的心理因素也是不确定的因素之一。

4.2.      股价范围的确定


4.2.1.                     成交股价的最大值


4.2.2.                     成交股价的最小值


4.2.3.                     溢价管理


4.3.      总结

哨兵理论为溢价管理,消除股市泡沫,防范金融风险提供了理论的依据。哨兵理论最大程度地 抑制了随机因素对股票交易的干扰增加了估价的确定性。

5.   相似的概念


5.1.      箱型理论

箱型理论是由美国人戴维斯尼古拉根据其在证券市场交易中的实践所提出的一个理论。“达韦斯·尼古拉认为股价一般是在一定的范围内波动,这样就形成一个股价运行的箱体。当股价滑落到箱体的底部时会受到买盘的支撑,当股价上升到箱体的顶部时会受到卖盘的压力。一旦股价有效突破原箱体的顶部或底部,股价就会进入一个新的股票箱里运行,原股票箱的顶部或底部将成为重要的支撑位压力位。因此,只要股价上扬并冲到了心里所想象的另外一个箱子,就应买进;反之,则应卖出。” [8]

5.2.      涨跌限价


5.3.      熔断制度

“熔断是指市场变动价格触及到某个规定幅度时,实施停止全天或者规定时间段内交易。也就是说交易所不接受超过涨停价的买单和低于跌停价的卖单,而熔断则是在这个最大波动限制之前的暂时性波动限制,熔断有一定启动条件。”。 [10] 这就是现实的熔断制度。

5.4.      区别


涨跌限价和熔断制度都是证券市场监管机制,这种监管机制是出于对投资者利益的保护和市场的稳定而实施的,是纯粹出于人为的需要而实施的。这种监管措施缺乏理论基础的支持,而哨兵理论也恰恰为他们提供了所必需的理论基础。 熔断制度同我所提出的溢价管理几乎是完全一致的。

6.   意义


[4]. Beizhan Liu (2016).  <<On the Uniqueness of Business Valuation>> in <<Policy Framework>> (pp 55-56)



 -- Beizhan Liu 

Sunday, January 1, 2017

O Holy Night - The King's Singers and the Mormon Tabernacle Choir

Country Management – Political Election - Equitable Election and Fund-Raising Mechanism Together on Beizhan Election Financial System 国家管理 – 政治选举 – 公平选举与筹款机制 兼论备战选举财经体系

Country Management – Political Election - Equitable Election and Fund-Raising Mechanism

Together on Beizhan Election Finance System


国家管理 政治选举 公平选举与筹款机制


1.      Realistic Election Financial System

In my previous article <<Election Politics and Head-Hunting Politics>>
[1], I proposed Beizhan General Election System, which is an advocate to improve the existing election system from the perspective of human resource management mainly. So, what can be done to develop and perfect the election fund-raising mechanism and the election consumption mechanism in the real election process?
1.1. Election fund-raising mechanism

Election fund-raising mechanism in reality is to raise political contributions from corporations and individuals. In terms of political contributions, in addition to election political donations, there are also routine political contributions to parties.

1.2. Election consumption mechanism

The election consuming mechanism in reality is that every candidate is basically to be responsible for his/her own expenses; party activities expenses are also to be afforded by the party itself.

1.3. Problems existed in reality

Current election financial mechanism has following problems in the two aspects:

1). Fairness issue

In terms of political fund-raising, some candidates can get more political contributions, some can not, then in election consumption, naturally some candidates will have more opportunities to promote themselves, and some can not, this is obviously not fair, this is contrary to the complete democratic spirit.

On the other hand, it is the political responsibility and obligation of every voter to participate in and support democratic politics. However, in case of election contributions, some voters have political contributions and some do not. Some voters contribute more, and some voters contribute less, this is also obviously not fair.

2). Regulation violation issue

In the process of political donation, we often hear this kind or that kind illegal fundraising events; political contribution scandals, and so on. In other words, this process is very easy to go wrong.

3). Solidarity issue

Since the political contributions of different parties and candidates come from a variety of donors, in order to win the donors, it is natural that there will be two kind mutual struggling results. One is the struggle for the indecisive donors; one is the struggle of the party for the interests of the stable donors, this kind struggles ultimately will be manifested in the struggle of the industries.

4). Decent issue

In terms of contributions, no matter what kind reasons, it is the matter of reaching out or speaking out to others for money, regardless of the fundraiser's official position level, reputation, it will make people feel not very decent. In some large gatherings, only a slight contribution was received, it is really a loss of face.

2. Beizhan Election Finance System

To solve the above problems, it is necessary to improve the existing election financial system. Here, I would like to propose Beizhan election finance system. Beizhan election finance system is a completely fair, clean, decent, united election finance system. When this election finance system integrated with Beizhan general election system, it will achieve the best thrift result.

2.1. Beizhan general election system

With the application of pre-requirements for candidates, the number of candidates can be controlled. So the overall budget for the elections can be controlled.

2.2. Beizhan election finance system

Beizhan election finance system
mainly includes the following contents:

2.2.1. Political responsibility tax (Political obligation tax)

Political election is the responsibility and obligation of every voter. Every voter also enjoys the country's political management services in different levels, so every voter has the obligation to pay a slight contribution to the political election. Therefore, I advocate the establishment of political responsibility tax (or political obligation tax). The political responsibility tax can be levied every four years; the tax rate can be about 0.5%. The max value of political responsibility tax can not be over $1,250, etc. Details can be decided according to demand. So that the fairness of election fundraising can be achieved, and so on. For every voter, it is affordable. For example: for a voter with an annual income of $50,000, his/her every four year’s political contribution is about: $250.

2.2.2. Standard equitable election consumption distribution mechanism (uniform system)

When having sufficient funding for elections, how can we fairly use the election fund? I advocate standard equitable election consumption distribution, which is the so-called uniform system. The election resources and services for each candidate are the same, such as: advertisements, propaganda, speeches, mass activities, etc., just like each candidate gets a standardized uniform. Each candidate will also receive the same financial compensation after the election, which is what I mentioned paid election. To do so, you can avoid the drawbacks of financial reimbursement system.

2.2.3. Election consumption management system

In specific operation, the political responsibility tax, of course, shall be managed by the revenue agency. Election consumption can be managed by the Constituency Administration Center under the leadership of the Election Bureau.

3. Significance
The advantages of Beizhan election finance system lie in multiple aspects, such as:

3.1. Fairness

The election resources acquired by each candidate are completely equal. Voters contribute same proportion of political contributions (political responsibility tax) according to their incomes, this is also reasonable.
Relatively wealthy voters shall also take a little bit more political obligations and responsibilities.
3.2. Integrity

Beizhan election finance system can minimize and eliminate the political contribution scandals to the max degree.

3.3. Intensiveness

Enterprises will never have the burden of political contributions; political frictions among industries will be removed, individual voter’s financial burden is not large either.

3.4. Standardization

The uniform system management implemented by the Constituency Administration Center under the leadership of Election Bureau, can have unified arrangements and achieve standardized business-like operation.
3.5. Intensiveness

The centralized procurement of election resources and services can be achieved, so as to achieve the intensiveness of election.

3.6. Decency

Candidates and parties can completely eliminate or reduce disgraceful political contribution activities. Election activities will also be more formal and decent.

3.7. Participation

As each candidate will acquire equal election resources and services, the voters’ participation rate will be extended greatly.  Since voters will not worry about to be requested for donations when participating political activities, voter’s willingness and behaviors to participate political activities will also be greatly increased.

3.8 Extensiveness

As the election resources and services are uniformly planned and uniformly distributed, and election expenses are quite sufficient, the contacts between candidates and voters will be more extensive.

3.9. Solidarity

The establishment of Beizhan election finance system, makes the struggles among different parties and candidates caused by political contributions to be disappeared. Thus the solidarity of party and country will be enhanced. The battles among industries will also come to an end.

3.10. Economic Benefits

The accumulation of every four year political responsibility taxes after political consumption, can be operated in the form of a fund, it may eventually become a huge amount of national fund (billions or several 10 billions), and earn further profits for the country. Adequate election fund will also further promote the media economy.

1.   现实的选举财经体系

在我以前的文章《选举政治与猎头政治》[1] 一文中,我提出了备战普选体制,这主要是从人力资源管理的角度来完善现有的选举体制的一种主张。那么,在现实的选举过程中,在选举筹款机制和选举消费机制方面,又有什么可以发展和完善的呢?

1.1.                  选举筹款机制


1.2.                  选举消费机制


1.3.                  现实存在的问题



就政治筹款而言,有的参选人能够获得较多的政治捐款,有的却不能够,那么在选举消费上,自然就会有的参选人有较多的机会宣传自己,有的却不能够,这显然是不公平的, 有悖于完全的民主精神的。

从另外一个方面讲,参与和支持民主政治,是每一个选民的政治责任和义务,但就选举捐款而言,有的选民有政治捐款,有的却没有。有的选民捐得多, 有的选民捐得少,这显然也是不公平的。


在政治捐款过程中,我们总是时常听到这样或那样的违规筹款事件,政治献金丑闻, 等等。也就是说, 这一过程是很容易出问题的。





2.   备战选举财经体系


2.1.                  备战普选体制


2.2.                  备战选举财经体系


2.2.1.                     政治责任税(政治义务税)


2.2.2.                     选举消费标准化公平分配机制(制服体制)

在有了充足的选举经费之后,如何公平地使用选举经费呢?我主张选举消费标准化公平分配机制,也就是所谓的制服体制。每个参选人所能够获得的选举资源和服务都是相同的, 例如:广告,宣传,演讲,群众活动,等等,就像每个参选人都获得一个标准化的制服一样。每个参选人在选举结束后也都给与相同的经济补偿,这也就是我所讲的有酬劳的选举。这样做,就可以避免财务报销制的弊端。

2.2.3.                     选举消费管理体制


3.   意义


3.1.                  公平性


3.2.                  廉洁性


3.3.                  节约性


3.4.                  标准化


3.5.                  集约性


3.6.                  体面性


3.7.                  参与度


3.8.                  广泛性


3.9.                  团结性


3.10.              经济利益


[1]. Beizhan Liu (2016) <<Election Politics and Head-Hunting Politics>> in <<Policy Framework>> (pp. 143-162)

  -- Beizhan Liu