80% investors make below average returns because they invest when the market is highly priced with a 3 - 5 year horizon.
We see that investors who invest with a 10 year horizon, have a higher potential to make good returns by staying invested.
The PE scale serves as an objective measure of how pricey the markets are at a given point in time. It shows the investor how much he is paying for every rupee of earnings.
If investing in the RED ZONE, keep a 10 year+ horizon
Invest in the GREEN & YELLOW ZONE, if looking at a shorter horizon
| Past 1 Yr Return | P/E | 3 Yr Return | 5 Yr Return | 10 Yr Return |
| -2.5 | <16 | 28.9% | 29% | 17.9% |
Historical data shows that inspite of poor near term return investors who displayed courage and temperament end up with good 3 – 5 year return
| Past 1 Yr Return | P/E | 3 Yr Return | 5 Yr Return | 10 Yr Return |
| 16.5 | 16-19 | 18.2% | 19.2% | 15.4 |
Investors look at moderate returns and end up with reasonable 3 – 5 year return
| Past 1 Yr Return | P/E | 3 Yr Return | 5 Yr Return | 10 Yr Return |
| 30.2 | 19 | 3.3% | 7.8% | 14.3 |
Investors look at moderate returns and end up with reasonable 3 – 5 year return
We at www.sipkaroindia.com have tried to make investors aware of their financial goals and construct a financial plan pertaining to the respective financial goals. We strongly feel that your investment style should match your financial objectives. If it doesn't, you should see professional help in dealing with investment choices that match your financial objectives.