1. Open Snowball App (version 3.3.0.3), enter the market tab, and find the index valuation. 2. Enter the index valuation interface and swipe up and down to see the valuation of most popular indexes. 3. Click on the corresponding index to enter the interface of historical trend of valuation, and you can view the valuation trend of this index in recent 10 years.
The English abbreviation of P/E ratio is PE, and the calculation formula is market value/net profit. You can simply understand the concept of "return on investment". Generally speaking, the smaller the P/E ratio, the cheaper the index.
Here, PE-TTM stands for rolling P/E ratio, which will use the latest net profit indicators to make P/E ratio more timely.
For the rolling price-earnings ratio TTM, the website provides different algorithms. I suggest you choose the second "equal rights" option. As we know, the index often contains dozens or even hundreds of stocks, and their scales are also large and small. If weighted by market value, it means that we should give more stocks with large market value when calculating the average value, so the rolling P/E ratio will be excessively affected by stocks with large market value and cannot reflect the overall valuation level of the market well. Equal weight value means that the calculated price-earnings ratio will be more balanced, reflecting the overall market enthusiasm of the index, regardless of market value, giving each stock the same weight ratio.
It is also important to choose the evaluation year. If the audit time is short, the valuation will be biased due to too little data. If the audit time is too long, the average level of valuation will change due to changes in the market environment, and the data will be inaccurate. So generally speaking, we choose ten years. Generally speaking, 10 will include a complete bull-bear cycle.
Look at the quantile. What is a quantile? Now in this chart, rank the rolling P/E ratio of the past 65,438+00 years from small to large, and see what percentage the current value can rank. The smaller the number, the more undervalued it is. Ok, next we can look at the trend chart of this index valuation. You will find many lines in this painting. Don't panic, let's look at it one by one. Let's look at the line that you need to pay attention to most, that is, this blue line, which represents the change of price-earnings ratio.
The other three lines are overestimation line red, underestimation line green and reasonable estimation line gray.
The red line is the overestimation line of 80% quantile; We observe the overvalued line of the Shanghai and Shenzhen 300 Index. If the blue line is above the red line, it means that the Shanghai and Shenzhen 300 Index is overvalued. At this time, it is usually considered to sell in time, and it is safe to leave the bag.
The dark gray line is the median estimation line of 50% percentile; Below the dark gray line, it shows that the index has entered a reasonably low valuation position. You can continue to wait and see
The last green line is the 20% quantile undervaluation line. If the blue line is lower than the green line, it means that the market is extremely undervalued. You can buy it properly.
For specific numerical values, you can look at the numerical area on the left in addition to looking at the picture. The principle is the same. A percentage point below 20% means underestimation, while a percentage point above 80% means overestimation.
Finally, there is an important reminder that P/E ratio valuation is not everything.
According to the formula of P/E ratio = market value/net profit, if the net profit is negative, then P/E ratio valuation cannot be used.