Undervaluation and Overvaluation of the Fund Market When investing in funds, we often encounter underestimation and overvaluation of the market, and both of these situations will have an impact on our investment. How to judge the undervaluation and overvaluation of the market?
How to judge the underestimation and overestimation of the fund market We can judge the underestimation and overestimation of the market by the price-earnings ratio of the fund. P/E ratio is the ratio of fund unit net value to fund income. When the P/E ratio is low, it means that the fund market is undervalued. At this time, investment can be appropriately increased to look forward to future income growth. When the P/E ratio is high, it shows that the fund market is overvalued. At this time, it is necessary to reduce investment and avoid increasing investment risks.
Underestimate or overestimate, how to buy a fund? The underestimation and overestimation of the market can not completely determine whether we should buy funds. We should comprehensively consider the historical performance of the fund, the experience of the fund manager and the investment strategy of the fund. If we think that a fund is stable when the market is undervalued and can maintain a good rate of return when the market is overvalued, then we can consider buying the fund.
To buy a fund, we should comprehensively consider various factors, and we can't just make decisions based on market undervaluation or overvaluation. Only in this way can the return on investment be maximized.