Thanks Kishan for the detailed analysis. It Would be great if you can do a similar analysis for PE based asset allocation. Eg assuming at PE 20 you start with 50:50 and add to equity if PE reduces or reduce equity share if PE increases. It would be interesting to analyse the PE based performance vis a vis 50 and 200 SMA. SMAs give delayed signals. PE based strategy might prove disastrous in a falling market - where you might be catching falling knives.
A numbers backed comparison which takes transaction costs and taxes into account would be of great help.
When you switch out of equity, you also earn interest on liquid funds. How would this improve the overall returns? Also, capital gains will be taxed each time you switch from equity. How would this change the overall returns?
Thanks Kishan for the detailed analysis. It Would be great if you can do a similar analysis for PE based asset allocation. Eg assuming at PE 20 you start with 50:50 and add to equity if PE reduces or reduce equity share if PE increases. It would be interesting to analyse the PE based performance vis a vis 50 and 200 SMA. SMAs give delayed signals. PE based strategy might prove disastrous in a falling market - where you might be catching falling knives.
A numbers backed comparison which takes transaction costs and taxes into account would be of great help.
When you switch out of equity, you also earn interest on liquid funds. How would this improve the overall returns? Also, capital gains will be taxed each time you switch from equity. How would this change the overall returns?