In recent years, there has been an upsurge of investing in index funds. The percentile of index valuation is to judge whether the index is overvalued or undervalued and whether to buy or sell it. Therefore, the percentage of valuation is very important, so what does it mean?

1. What is the valuation percentile?

In fact, percentile is a statistical term, and the significance of studying percentile lies in understanding the frequency distribution of a group of data. When studying percentiles, two concepts are particularly confusing. The concept of 1 is percentile, which usually refers to the value of a set of data to find the p percentile. The second concept is percentile ranking. Usually, a set of data is known. Find a percentile ranking whose data is in this set of data. So these two concepts are different. What we need to know now is the percentage of valuation. Valuation percentile is the development trend of index-only funds. If this value is high, you can buy it, if it is low, you can sell it.

Second, the factors affecting the valuation percentile

Therefore, many investors attach great importance to the valuation percentile and often study the valuation percentile. What are the factors of the above valuation percentile? In fact, there are still many influencing factors. We need to look at the index of the platform for two or three years before we can calculate the valuation percentile. If the development trend of the platform is poor in the past two or three years, then the valuation of percentile ranking has no reference significance. Furthermore, the valuation data of some indicators are relatively concentrated, and their percentile ranking changes greatly, so the percentile ranking only reflects the probability distribution of the numerical size, and does not represent the fluctuation degree of the numerical size.

Third, summary.

We need to know that data don't lie. As long as the concept of valuation percentile is clearly understood, you can invest in index funds. If in the process of purchasing funds, you find that the CSI dividend and the GEM have been delisted, then you can redeem the GEM, so that the cost of capital will be reduced. In fact, the fund market is very complicated. You must know clearly before you can invest money, and you can't step in at will.