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PE Ratio can be used effectively for investment and we present below an approach for investment based on few rules formulated by us. We have based our rulkes on the basis of Benjamin Graham Intelligent Investor book readings.
Rule 1: Save as much money as possible for the purpose of investing.
Rule 2: Before investing (every time), look at your asset allocation and in general, market’s PE valuations.
Rule 3: Continue investing via SIP as per the original plan. Do not stop SIP midway for any reason till target investment value (not the target corpus value) is reached.
Rule 4: Broadly keep the asset allocation between 60% - 80% in favor of equity - for PE Ratio range of 18-24. And continue investing in SIPs as per investment plan.
Rule 5: If markets fall below 18PE, increase SIPs.
Rule 6: If markets fall further below 16PE, increase buyout, and
Rule 7: If markets fall below 14PE, invest maximum amount in equity in lumpsum.
Rule 8: If market crosses above 23PE, restrict investment amount in Equity.
Rule 9: Above 25PE, reset equity allocation to something in between 65% - 75%,
Rule 10: Above 27PE, do not invest further and reset the asset allocation to below 65%
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Rule 1: Save as much money as possible for the purpose of investing.
Rule 2: Before investing (every time), look at your asset allocation and in general, market’s PE valuations.
Rule 3: Continue investing via SIP as per the original plan. Do not stop SIP midway for any reason till target investment value (not the target corpus value) is reached.
Rule 4: Broadly keep the asset allocation between 60% - 80% in favor of equity - for PE Ratio range of 18-24. And continue investing in SIPs as per investment plan.
Rule 5: If markets fall below 18PE, increase SIPs.
Rule 6: If markets fall further below 16PE, increase buyout, and
Rule 7: If markets fall below 14PE, invest maximum amount in equity in lumpsum.
Rule 8: If market crosses above 23PE, restrict investment amount in Equity.
Rule 9: Above 25PE, reset equity allocation to something in between 65% - 75%,
Rule 10: Above 27PE, do not invest further and reset the asset allocation to below 65%
Subscribe for free share market tips and make money like professionals. All those looking for investment tips can consider using the delivery calls.
