Investment by Sensex PE Ratio. Excellent Returns

#1
To determine the P/E ratio of Sensex or any company, investors can divide the stock price by EPS (Earnings per share)

Price to Earning (PE) = Stock price / Earnings per share (EPS)

By determine PE we can know whether Sensex or any stock is Cheap, Reasonable or Costly.

Sensex PE = Sensex Current Value / EPS (30 Companies in Sensex)

By knowing Sensex PE Ratio we get whether Market is at Under Value, Fair value or Over Value so we can decide our Investment.

In general Sensex PE and Market Condition are as follows:


Now Sensex is at 25000 and its PE Ratio is 20.

IN Jan. 2008 when Sensex was at 21000 its PE Ratio gone to 27/28 and after that bubble was blast and investors lost huge money.

By study of more than 15 years Sensex PE Ratio, I made following chart and it works.

Below chart shows Sensex PE Ratio Its yearly Return and Chances of loss.

This chart clearly indicates that if Sensex PE is below 12 be Greedy and BUY because loss chances are 0-2% only and return is 56 – 67 %.

And it also indicates that if Sensex PE Ratio is going above 24 then start selling because Loss chances are 100%.

Now Sensex PE is 20 so yearly returns may be 2.56% and Loss chances are 45%.

Make your own investment decision according to below table.

Don't waste your hard earned money to take advice from so called Gurus.




Thank You

Nimish Shah


"Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway." - Warren Buffett
 

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#4
Less than 14 three year return 152% that means almost 50% yearly and 22 - 24 there is 100% Risk. Both seems almost correct. So thanks to both Mr. Sanjay Bakshi and Nimish Shah.
 
#5
To determine the P/E ratio of Sensex or any company, investors can divide the stock price by EPS (Earnings per share)

Price to Earning (PE) = Stock price / Earnings per share (EPS)

By determine PE we can know whether Sensex or any stock is Cheap, Reasonable or Costly.

Sensex PE = Sensex Current Value / EPS (30 Companies in Sensex)

By knowing Sensex PE Ratio we get whether Market is at Under Value, Fair value or Over Value so we can decide our Investment.

In general Sensex PE and Market Condition are as follows:


Now Sensex is at 25000 and its PE Ratio is 20.

IN Jan. 2008 when Sensex was at 21000 its PE Ratio gone to 27/28 and after that bubble was blast and investors lost huge money.

By study of more than 15 years Sensex PE Ratio, I made following chart and it works.

Below chart shows Sensex PE Ratio Its yearly Return and Chances of loss.

This chart clearly indicates that if Sensex PE is below 12 be Greedy and BUY because loss chances are 0-2% only and return is 56 – 67 %.

And it also indicates that if Sensex PE Ratio is going above 24 then start selling because Loss chances are 100%.

Now Sensex PE is 20 so yearly returns may be 2.56% and Loss chances are 45%.

Make your own investment decision according to below table.

Don't waste your hard earned money to take advice from so called Gurus.




Thank You

Nimish Shah


"Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway." - Warren Buffett
Extraordinary . Very helpful .
 
#7
hello


to put the idea in practise one should start investing in nifty bees ( presuming nifty pe will be broadly similar to sensex pe) on sip ( monthly ) basis when sensex(nifty ) dips below 14 ( or as per your risk apetite )

i think that when the cycle turns one will be rewarded fruitfully

ps--- how to ascertain sensex ( nifty ) pe --- at eod ?


thanks


sumit
 
#8
hello


to put the idea in practise one should start investing in nifty bees ( presuming nifty pe will be broadly similar to sensex pe) on sip ( monthly ) basis when sensex(nifty ) dips below 14 ( or as per your risk apetite )

i think that when the cycle turns one will be rewarded fruitfully

ps--- how to ascertain sensex ( nifty ) pe --- at eod ?


thanks


sumit
Google is a friend:
http://www.nseindia.com/products/content/equities/indices/historical_pepb.htm

A SIP when NIFTY or Sensex is below a certain level is a good idea for new investors. Investing in growth stocks (that are under valued when the index P/E ratio is below a certain level) will perform better than investing in the index but it is not so straight forward to find such stocks.

Edit:
When investing in a SIP, it might be a good idea to exit the market only during times that the P/E ratio of the index is above a certain level.
 
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#9
I like this thread. Indeed, Warren Buffet himself says that he always buys undervalued (Low P/E) stocks and nothing else.

However, is this thread not too simple to be true? Can P/E be so simple?
 
#10
I like this thread. Indeed, Warren Buffet himself says that he always buys undervalued (Low P/E) stocks and nothing else.

However, is this thread not too simple to be true? Can P/E be so simple?
The Russian market indexes have been at a very low P/E for a while and the British market index only recently has an above average P/E.

Invest in markets or companies that have a strong future. The difficult part is in finding which markets have a strong future.
 

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