How to treat index valuation?
For the valuation of the index, there are several common sense investors need to keep in mind. First of all, most industries are valued by P/E ratio, while cyclical industries are not, such as brokerage, banking, real estate and energy. These industries are more suitable for price-to-book ratio, and at the same time, we should observe the external environment and make judgments in combination with other aspects.
Regarding the P/E ratio, there are three indicators in total, including dynamic P/E ratio, static P/E ratio and rolling P/E ratio, among which the rolling P/E ratio is calculated according to the income of four quarters, so this indicator is the most accurate.
Observing the price-earnings ratio of the index mainly depends on the position of the current price-earnings ratio relative to the historical price-earnings ratio of the statistical interval. The lower the historical percentile, the more seriously the index is undervalued. For example, the percentile of the index is 10%, which means that in the historical statistical interval of the index, only 10% of the time is lower than the current valuation, and the statistical interval of the index has to go through at least one bull-bear cycle as a reference.
How to check the index valuation?
Most fund sales platforms provide index valuation inquiry, such as omelet fund and Alipay. Alipay opens "Fortune", clicks "More" in financial management, clicks on financial management tools, and finds "Index Select Fund", so you can query the valuation of related indexes.
All right. The analysis of index valuation is here, hoping to help everyone. Warm reminder, financial management is risky and investment needs to be cautious.