| Benjamin Graham1934put up formally the concept of the p/e ratio in hisbook--securities analysis. because of this index is not only considering the yields andprices of financial assets, but also consider the profit ability, growth ability, riskfactors.so it has become the most commonly used valuation model to predict stockpricing and evaluation. Known as the p/e ratio strategy, namely the low p/e ratio ofstock investment gains more. In view of this, this article based on p/e ratio strategyanalyze low p/e ratio of stock portfolio return and the excess return, andcorresponding with high p/e ratio, aim to verify the applicability and feasibility of thep/e ratio strategy ofA-share market.This paper describe systematically the p/e ratio and its decision-making theory.Analyzes the valuation method based on p/e ratio, which determine the research ideaof this article. By adopting the method of descriptive statistics and comparativeanalysis methods, respectively from the short-term, medium-term and long-termanalysis the applicability of p/e effect in our country. and also provide the investorssuggestions for reference about how to invest under different p/e ratio levels.The results showed that, regardless of the short-term, medium-term andlong-term investment, p/e effect is obvious in our country. But low p/e ratio and highp/e ratio between excess returns will be as time and stock portfolio changes. In thewhole market belongs to the rising stage, the low p/e ratio of stock portfolio canobtain more excess returns, and in the whole market is in decline stage, p/e effect isnot obvious. In the recent low period, high and low p/e ratio of investment gains werelittle changed.Compare Short-term, medium-term with long-term investment, the effect of themedium with low p/e ratio stocks is the largest gains. That under the current state ofthe p/e ratio, only investors hold a low p/e ratio for three years can get the bestinvestment profit. |
