Nifty P/E ratio is all time high 29.8 on 3-4 june 2019? What is your strategy?

[a3m0n]

Nifty historical data says every time nifty P/E ratio goes above 23 is overbought zone and will face correction and currently is about 30. It does not look safe at all.

I already moved my SIP to liquid funds and waiting for a big correction. what you are doing?

 

[pierrepierre]

@a3m0n Here's what MAY happen... You'll lose out on making money during this bull run... And you feel left out
.. Next time there's a correction and PE is at 32 from 34 you will feel tempted because you missed out... And then it'll crash to 25...and you'll apply stop loss brakes...just a possibility of how psychological the markets are

 

[resjudicata]

@pierrepierre Perfect answer

 

[jesuslovesme1973]

@a3m0n

Nifty historical data says every time nifty P/E ratio goes above 23 is overbought zone

Nifty calculation has changed over the years. Till 2009, Nifty used to use full market cap & post that it uses free float methodology. So comparisons don't make sense. Compare historical BSE Sensex - They have been using free float for longer.

That said, even the BSE Sensex also shows that P/E is very high as compared to historical P/E

 

[hunnybunny]

@a3m0n If you don't need the money for next 10 years, it would be sub-optimal not to continue the SIP. Its VERY tough to time the mkt. But yes ... if you need the money in next three years, safer option at this point would be to put it in high quality debt funds. For long term investments your returns depend much more on timing of exit than of entry.

 

[nora1986]

@a3m0n I've been tracking the market since 7 years.
I was hesitant to do an Sip in the initial years because I had just started accumulating money after a break in work for higher studies.

Started a sip then stopped it when I had some health problems . Then reinvested again.
I realised that stopping the sip was a bad idea .
I should have continued investing atleast 1000 per month atleast.
If u track the PE u will lose out.
Do an Sip with an amount u don't need for bare minimum survival.
For example,
If u want to go on a holiday by spending 2 lakh, then cut it down to 1.5 lakh and invest the rest 50k/12 in an Sip.

 

[a3m0n]

@nora1986 But the last time P/E ratio was above 28 in 2008 when market crashed and dropped 50%. I have big money invested in it although I don’t need this money for next 10 years at least.

 

[nora1986]

@a3m0n The p/e was 28 recently in 2017 I think. Then it crashed in October 2018,then it has recovered.
If it crashes to 50% I will buy more unless I lose my job.
As I said ivest your surplus amount. Be ready to accept that fall.
Apart from there are other indicators like p/b , alpha etc... I would advise u to KISS

 

[ponkine]

@a3m0n Is market overvalued??
Probably.

Is it gonna crash??
Nobody knows.

Does major indicators raise any concern??
Yes. To some extent.

Should you book profits??
Depends on which kind of investor you are.

Should you stop SIP??
Probably no.

Should you do proper asset allocation in this situation??
DEFINITELY.

Should you start your SIP now??
Yes.

Should you take unsolicited advice from strangers on internet??
NEVER.

 

[unbridledwild]

@a3m0n Sell. Always learn to book profit

 

[igivemylife2jesus]

@a3m0n Don't look at just the P/E ratio, have a look at P/B and dividend yield ratio too, and then decide.

If you observe all three, you will find that the current situation is much better than 2008.

 

[a3m0n]

@igivemylife2jesus Ok will compare all these.

 

[resjudicata]

@a3m0n My strategy is to put huge money into the quality stocks of Nifty 500 Value 50 index. Value stocks tend to have way less P/E (13 P/E compared to 29.8 P/E for Nifty) so they are less likely to go down severely.

 

[a3m0n]

@resjudicata Agree with you as last 7 year cagr of lowest performing value fund is above 11%

 

[momoftwoteens]

@resjudicata Example of this funds?

 

[lee1009]

@a3m0n If you are SIP’ing then you are expecting the market to fall, don’t you?

 

[a3m0n]

@lee1009 SIP in liquid fund

 

[lee1009]

@a3m0n No I meant since you are SIP’ing into these funds, are you not expecting the markets to fall to pick up more units?

 

[a3m0n]

@lee1009 My last SIP when nifty was 11141 in may 2019

 

[nora1986]

@a3m0n What was the date? When did u start the sip?
If u are investing money that u may need in immediate future for mandatory expenses then put less money in sip