The high valuation of index funds means that the index has risen by a large margin and may be overestimated. The market outlook may fall. When it falls, investors will face huge losses. If investors don't have time to sell, they may turn from initial profit to loss. Therefore, when the index is overvalued, you can take profit appropriately.

Investors can judge whether the valuation of index funds is too high by the following methods:

1, Alipay or Tian Tian Fund has the functions of "index traffic light" or "index valuation". This function will directly indicate whether the fund is in the overvalued area, undervalued area or normal area.

2. Check the PE(PB) percentile value of the fund: the lower the PE(PB) percentile value, the more suitable it is to buy; The higher the percentage value of PE(PB), the more suitable for selling.

General: when the percentage of PE or PB is less than 20%, it means that it is underestimated; When its percentile is higher than 80%, it means that it is overvalued; The percentile is between 20% and 80%, which is a reasonable interval.

3. Industry funds directly compare industry PE, which is higher than the industry average, indicating that funds may be overvalued; Being below the industry average means that it may be underestimated.