When the broad-based index valuation exceeds 100 times, how should one choose?

When the valuation of the broad-based index exceeds 100 times, once the market direction changes, market risks must be guarded against. Lin Bo, the chairman of Fujian Rolling Snowball Investment Company, who has experienced many bull and bear cycles, believes that history has given multiple answers - when the price-earnings ratio of the broad index exceeds 100 times, it is definitely not sustainable. Historical data shows that at the end of 1989, the average price-earnings ratio of the Nikkei 225 index exceeded 70 times, with some industries exceeding 100 times. Over the following 20 years, the Nikkei 225 index fell by more than 75%; at the beginning of 2000, the price-earnings ratio of the Nasdaq index exceeded 120 times, and in the next year and a half, the decline reached 80%... However, the current A-shares are experiencing both ice and fire, with the price-earnings ratios of the overall market value and dividend index at less than 10 times, and the price-earnings ratios of the Shanghai and Shenzhen 300 and the SSE 50 are less than 15 times. These large-cap weighted stocks are the backbone of A-shares, establishing that the overall valuation of A-shares remains in a reasonable or even low range. Lin Bo believes that the price-earnings ratio indicator may seem simple, but it applies to over 80% of stocks, and the reasonable valuation for most stocks should be around 20 times, so the reasonable valuation for an index as a stock portfolio would also be around 20 times, which serves as an anchor. Lin Bo said that when investors keep the anchor of valuation in mind, they will have a rough judgment of the temperature of the market, either partially or as a whole.