The return on earnings method can help investors obtain higher returns, but how to check the return on earnings as a valuation indicator? How much income can we get by applying the profitability method to the fixed investment strategy? Let's learn together.
Earnings yield is an indicator derived from the P/E ratio. We can query the P/E ratio through financial management software, and then calculate the profit yield. The profitability and P/E ratio are reciprocal. We can calculate the profitability only by obtaining the P/E ratio.
The main query methods are as follows:
1. Professional financial terminals (payment): wind financial information terminals and choice information financial terminals;
2. WeChat public account "10 times of fixed investment in ten years" (direct query)
The profit rate is updated in the evening of each trading day. What should we do when we make a fixed investment in the daytime? Generally, the profitability will not change too much in the short term, and the data of the previous trading day can be referred to when making a decision.
The power of profitability method for fixed investment. Graham's profitability method was established decades ago, aiming at the American stock market at that time. Since then, this method has been established in the markets of all countries for a long time. In the past few decades, the US stock market has achieved an average annual compound return of 15% using the profitability method. This method is also applicable to the young Chinese stock market.
We all know that in the past ten years, the domestic economy has grown relatively fast, and the rate of return on fixed investment is high, which is mainly due to the rapid economic growth. The future economic growth will not be so high, and the soaring bull market will also be less and less, which will lead to our future investment income not so attractive, but the future rate will also guarantee the return of 12% - 15%, which is also very good.
Earnings of the earning rate method in Hong Kong stocks: Since the birth of the Hang Seng Index, the earning rate has fluctuated back and forth between 2.5% and 20%. During this period, there were five times when the profitability was greater than 10%. If we use the profitability strategy to make decisions, we should wait patiently for opportunities. What if we can't wait for opportunities or there are few opportunities? We have more index fund varieties. Although each index fund does not underestimate many opportunities, once we have mastered the index fund varieties in different stock markets, there will be good investment opportunities every few years. All index funds are not underestimated, which is very rare.
Interestingly, the profitability method was born in the United States, but A-shares and Hong Kong shares began to rise after Graham's death. This strategy is still applicable to A-shares and Hong Kong shares. In the past few decades, the average yield of the profit rate method in the US stock market was 15%, but the yield in Hong Kong stock market was 20%. Why is this? Because the United States is already a developed country, the corresponding stock market growth will be slower. But in recent decades, Hong Kong's economic growth is still higher than that of the United States in the same period. So Buffett said: "Buying index funds is buying national fortune", which is very reasonable.
