After reading more than n books on investment,
Several important factors that need to be comprehensively considered when investing in index funds according to their own conditions.
Simply put;
Because any point can be taken out to write a book in detail.
Please correct the mistake.
1, price-earnings ratio (PE)
The valuation I am talking about is actually very simple, that is, the price-earnings ratio (PE) of an index (like CSI 500 Index 00905). On September 6th, the CSI 500 Index was valued at 33.94.
Wind data, the highest valuation of the CSI 500 index is 92, and the lowest is 2 1.
There is no doubt that the valuation has a certain fluctuation range. If you buy in the range at the bottom of the valuation and sell in the high range, you will achieve high selling and low sucking.
Looking at PE valuation from another angle:
20 15, not too far from a bull market, the Shanghai composite index is at 4000 points, and only 10% of companies are less than 30 times PE.
At 5000 points, only 6% of A-share companies are less than 30 times PE.
If you rush in at 4500-5000 to buy stocks with a valuation higher than 50 times, I think you haven't solved it yet?
What is the impact of low valuation on index funds?
Low valuation, most suitable for index funds or a basket of stocks with little correlation.
Combine dozens or hundreds of stocks to average their financing ability and capital operation efficiency. At this time, it is very appropriate and reasonable to measure this group of stocks with the average market yield and financing cost.
Moreover, there is a big feature like index funds, which are almost "immortal".
Because companies with declining profitability will be kicked out of the index and maintain the vitality of the index.
When the Dow Jones index was founded, there were 20 stocks. More than 65,438+000 years have passed. Only one of these 20 stocks is still alive, and the Dow Jones index rose from more than 40 points to more than 20,000 points.
Retail investors can avoid many "black swans" by buying index funds, and they can also avoid the tragedy of enterprises going bankrupt because they insist on investing for more than ten years.
2. Profit rate
Graham believes that when the yield is more than twice the yield of national debt, the stock market should be considered.
Moreover, considering the possibility that the yield of national debt will be too high or too low, the limited yield is between 10%- 14%.
For example, CSI Environmental PE is currently valued at 28. 1 1, and the yield of government bonds is 3.66%. ROE is about 10.42%, which is more than 2*3.66%, which meets Graham's investment conditions.
Graham compared the stock market return rate and risk-free return rate from the perspective of investment income.
When the stock market return rate is much higher than the risk-free return rate, we will consider the stock market again.
Remember that bonds will bottom out before stocks. 10, Sri Lanka's national debt has not reached 4%. Don't feel that you have missed the big bull market as soon as you rebound.
Now is not the most painful time, because everyone is still interested in talking about stocks, and most people are miserable and will soon bottom out.
3. percentile
Knowing the highest and lowest PE valuation of an index, combined with the current valuation, you can know whether the current valuation is cheap.
Percent is a statistical indicator that shows the position of the current valuation in the historical interval.
For example, 90% is higher than the historical 90%.
Or the CSI 500 index, yesterday's percentile was 43.09%.
4. Asset allocation (position)
This is too complicated to say, just remember one sentence, don't put eggs in one basket.
This year, Hong Kong stocks are the first, followed by big blue chips and beautiful 50. Anyway, everyone else earned 30%+, and the little leek began to listen to the big V and rushed in. It's weird not to cut you.
If you don't put your eggs in one basket, you won't miss the rise of an industry index fund, and of course you won't earn the most.
Personally, I don't like the gambler's operation, which is either an explosion or a failure.
I like to accumulate over time, and the long-term income is 15% per year.
Therefore, the index fund of an industry, no matter how optimistic, has a maximum position of no more than 30%.
5. Psychological endurance
I think the first four items are not important, but psychological endurance is the most important.
Most people can only accept profits, not losses.
Before you start investing, I ask you: If you invest for 7-8 years, you may earn 150% when the bull market comes, but there may be a 50% loss in the middle. Can you stand it?
Most people will say: Yes!
But the reality is that most people hand over the cheapest chips at the bottom of the bear market.
Don't overestimate your tolerance.
Only those who have paid tuition fees with real money and experienced at least one round can realize that it is easy to throw high and suck low, and it is really difficult to do so.
Because we are human beings and have feelings, only anti-human beings can make money.