The absolute value of the future net cash inflow of listed companies and then discounted to this year is the stock valuation. For a fund with good performance and good development, the part whose future development value is expected to be higher than that of the existing fund is the overvalued area of the fund.

Assuming that the cost price of a fund is 10, if it is predicted that the fund will rise to 12 in the future, then 2 is an overestimated area of the fund. The overvalued area of the fund is not absolute or fixed, depending on different fund prices.

Generally speaking, for index funds, we can judge whether to invest or sell according to the valuation of relevant indexes. Generally, we invest in the low valuation range, hold in the normal valuation range and sell in the high valuation range. However, not all fund development trends follow certain rules, and different fund varieties and different volatile markets need different operation methods.