Stock market prices fell for a long time, although many Dax companies reported record profits. Prices have picked up over the past 30 days. ETF savers don’t need to get nervous now: the Dax is still quite cheap.
When looking at the profits of the Dax companies, some investors wonder why the leading German index has lost a good sixth of its value since the beginning of the year: 15 out of 40 Dax titles are likely to report record profits this year. The overall gains of the index are almost exactly at the level of the previous year. Nonetheless, prices have fallen.
So is now the right time to buy cheap Dax ETFs? Or is the Dax only apparently cheap at the moment?
One thing is clear: if you want to reduce your earnings gap in old age, you have to save something in addition to the statutory pension. ETFs offer a popular tool for this and have been successful in recent decades. There is a good chance that this will remain the case for years to come.
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Many key figures continue to support the image of the cheap Dax: The average price-earnings ratio (P/E) of all stocks is currently between twelve and 13. A low P/E is an indication of cheap shares because investors have less of their own money per euro of company profits to count.
Since the dot-com price bubble burst at the beginning of the millennium, the price-earnings ratio of the Dax has usually fluctuated in the range between ten and 18. Only at the height of the financial crisis did the index fall to a price-earnings ratio of eight at times – in the past 30 years, according to data from Boerse.de however, a one-off event. A year ago, the P/E of the Dax was also higher than it is now.
Compared to historical P/E ratios and other indices, the Dax continues to offer investors cheap prices despite the recent gains. Good news for ETF savers who are buying now.
The FOCUS Online guide answers all important questions about pensions on 135 pages. Plus 65 pages of forms.
The question remains whether investors should rather buy Dax ETFs or other indices.
The Dax is also currently cheap in an international comparison: In the American indices S
This data also shows that the price gains of the past few weeks do not provide a reason to avoid the Dax.
A look at the individual stocks shows that the favorable P/E ratio of the Dax does not necessarily mean higher profits in the future: The car manufacturers BMW , Mercedes-Benz and VW , which also belong to the Euro Stoxx 50, remain the cheapest shares in the index in terms of P/E ratios. Despite high dividends, their P/E ratios have mostly been in the single digits for years because investors fear that their supremacy could crumble in an electric car world. Other values suffer from similar concerns about the future.
This is one of the influences that has kept the Dax P/E consistently below those of S
Share prices reflect the current situation less than expectations for the future. The worries about the car manufacturers are likely to remain for a few years and weigh on their prices. The same applies to Dax titles with similar concerns.
The low P/E ratio of the Dax does not necessarily mean that it will develop better than other indices in the future and share the same P/E ratio with them in a few years. It is possible that the Dax will be cheaper than the Nasdaq in ten years.
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The fairly constant Dax-PER also shows that if share prices develop in the future in a similar way to the almost eight decades since the Second World War, investors improve their results less by buying the index as cheaply as possible at the right time. They improve their results by buying and waiting as companies improve earnings and the index rises fairly evenly over the long term. Better to be in the market for a long time than hoping for the right start. Those who start early earn the most.
Anyone who saw the Dax as a good investment a year or five ago has given little reason to change their mind since then. He can currently only buy it cheaper than a year ago. In any case, investors should avoid the popular mistake of buying shares at high prices out of greed and selling them off for fear of setbacks.
The FOCUS Online Guide shows you how to invest your money profitably and avoid expensive traps.