Investment by Sensex PE Ratio. Excellent Returns

#21
AMtek Auto's P/E is less than 2

Anyone have any ideas?
hello ,

dont fall into trap of low pe companies . individual scrips can remain depressed for a very very long period of time before delisting etc .

howver when an index such nifty 50 such figures cannot be fudged .therefore what works for nifty might not work for individual scripts .

also it is better advised to invest in nifty only thru sip when nifty falls below a certain Pe level .

rgds


sumit
 
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#22
Hello

Portfolio Allocation based on Historical PE of the Market (either Nifty or Sensex) seems to be a Good Idea . . .

We are targeting irrational exuberance i.e excess on both sides of the equation . . .


Rough rules would be
Lets say Neutral at PF of 20 (maybe we are already invested about 50/60%)

If it keeps falling below 20 towards 18/16 we keep doing SIP

And as it goes above 22 we start Systematic Dis-investment

With few cycles this process should become intuitive/mechanical . . .

As long as an investor takes into account the markets can remain in an irrational more for a very very long periods of time . . .

So, patience to wait for right opportunity for scaling-in and scaling-out is would be the most important quality to posses.

Now this takes care of when to buy/sell, what to buy/sell (instrument) is another topic all together :D

Thanks
 

suri112000

Well-Known Member
#23
Hello

Portfolio Allocation based on Historical PE of the Market (either Nifty or Sensex) seems to be a Good Idea . . .

We are targeting irrational exuberance i.e excess on both sides of the equation . . .


Rough rules would be
Lets say Neutral at PF of 20 (maybe we are already invested about 50/60%)

If it keeps falling below 20 towards 18/16 we keep doing SIP

And as it goes above 22 we start Systematic Dis-investment

With few cycles this process should become intuitive/mechanical . . .

As long as an investor takes into account the markets can remain in an irrational more for a very very long periods of time . . .

So, patience to wait for right opportunity for scaling-in and scaling-out is would be the most important quality to posses.

Now this takes care of when to buy/sell, what to buy/sell (instrument) is another topic all together :D

Thanks
We need to consider the timeframe required to complete a cycle (both up and down moves makes one cycle) historically. As the markets are more prone to prolong the cycles, we should have cushion of funds and time to wait for the opportunities. I suggest P/E ratio 18 instead of 20 to scale in below 18 and scale out above 18.

Your signature has a lot of sense if one can understand it in true spirit.:thumb:
 
#25
We need to consider the timeframe required to complete a cycle (both up and down moves makes one cycle) historically. As the markets are more prone to prolong the cycles, we should have cushion of funds and time to wait for the opportunities. I suggest P/E ratio 18 instead of 20 to scale in below 18 and scale out above 18.
Current PE is hovering between 21 - 22.

Statistically 18.6 is the median for the PE so you are right about the number :)

Once you have a stable portfolio then we can play by these rules . . .

But keeping the surplus invest-able income into debts when the PE is above 18 may not work to our advantage.

So different situations . . . different solutions . . .

Even if one ends up getting into markets at PE of 24, holding for 7 years has given returns of Aprox 9% . . .

But all along we should remember, all the above discussions / statistics also prove one thing . . .


for an investor

Time in the Market is far more important than timing the market



Thanks
 
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#27
the nifty /sensex pe levels are very interesting and worth considering .

also one must also look into account into the prevailing bank fd /nsc interests .

if the current bank fd interest dives significantly from currently say from 8-8.5 to 6 levels

we can consider investing in nifty at higher pe levels similarly if the bank int rates increase significantly say at 11-11.5 levels one shud invest in nifty at lower pe levels .

i again reiterate any investment in nifty shud be on sip basis only and one shud have cushion of funds as already mentioned by an esteemed member of this forum .

with warm regards


sumit
 

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