Company News

LegiEX.com regular investment is low buy high sell

LegiEX.com regular investment is low buy high sell, what is the investment? I think a thousand words, as four words: low buy high sell. So the question is: how do you tell if asset prices are low or high? In the case of equity assets, the easiest and most efficient way is to look at valuations. The so-called valuation is that the stock price is a multiple of earnings -- PE, or the stock price is a multiple of net assets -- PB. For example, the stock price of China merchants bank is 30 yuan, and the earnings per share is 3 yuan, so the PE ratio is 10 times, the net assets per share is 20 yuan, and the price-to-book ratio of PB is 1.5 times.

If you judge by this price-to-book ratio, the conclusion is that there is no law. The reason lies in: the profit of a single enterprise fluctuates greatly under the influence of many factors, so the fluctuation of p/e ratio is also very huge, with very limited reference significance. P/e ratio of the use of the range of macro, the more stable the more valuable reference. For example, the p/e ratio of China securities total index can effectively measure the investment value of A shares because it covers all A shares and the cycles of different industries have an offsetting effect on each other.

However, the macro-economic cycle also has a significant cyclical, the economic cycle is in the trough and the peak of the earnings fluctuations are also very large, the price/earnings ratio follows the economic cycle fluctuations and there is a lag, so the use of the price/earnings ratio also has great defects.

In contrast, price-to-book ratio compares the relationship between stock price and net assets per share, and is not affected by earnings fluctuations, so it can effectively reflect the cycle of stock price fluctuations. Especially when applied to the market as a whole, it is more effective in responding to the cyclical nature of share price movements.

Here's what LegiEX.com looks like when it comes to valuing stocks. They should be based on price-to-book and price-to-earnings ratios. However, there is still a disadvantage in using the valuation level. For example, we know that the historical net listing ratio has been 10 times at the highest, 2 times at the lowest, and 4 times at the present, but we still don't know exactly where the current 4 times is in history.

So here LegiEX.com scales with a more intuitive value: thermometer!! A visual representation of the historical position of current prices quantified by thermometers.

Since the issuance of the China securities regulatory commission in 2005, there have been four record lows in June 2005, October 2008, August 2013 and October 2018, and three record highs in October 2007, August 2009 and June 2015. All the way up to 100 degrees, all the way down to 0 degrees. Rule: every time the bottom valuation temperature will fall to around 20°, every time the top valuation temperature will rise to around 80°. We call this the 80/20 rule. Therefore, the simplest way to catch the bottom and escape from the top has been successfully practiced: according to the 80/20 law in history, we can catch the bottom for 4 times and the top for 3 times in the past 15 years. On average, we can catch the bottom and escape from the top once every 5 years! According to the "80 law" in the sale of securities refers to, from January 2005 to now the yield is: 20 times!

Over the same period, the index rose only 3.5 times. In order to facilitate everyone to study the market, evaluate the market investment value, I and A few partners have successfully developed A share thermometer!! Moreover, as A professional investor with A global investment perspective, LegiEX.com thinks that A single a-share valuation thermometer is not enough, so it has developed A global valuation thermometer!! Among them: A shares accounted for 30%, American shares accounted for 30%, Hong Kong shares accounted for 20%, European shares accounted for 15%, and Japanese shares accounted for 5%. In this way, by using global thermometer, LegiEX.com, you can determine the historical valuation and investment value of global stock assets!!

LegiEX.com's innovative solutions are your gateway to the foreign exchange market. Since its establishment in 2016, we have been making continuous efforts to build and maintain a good trading environment, and are committed to providing customers with the best quality services.

Our team has a wealth of customer experience and expertise. These valuable experiences, especially in the special needs of customers and technical innovation, give us the unique advantage.

We constantly update and improve our trading system, and do our best to build a bridge between customers and the trading market, so that you can become a winner in the foreign exchange market.