Markets stocks

We’ve Reached The ‘P/E Ratios Are Irrelevant’ Stage

"...three-quarters of the way to the Tech Bubble high."

"...three-quarters of the way to the Tech Bubble high."
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2 comments on “We’ve Reached The ‘P/E Ratios Are Irrelevant’ Stage

  1. George says:

    Watch what they do not what they say…..repeated daily at a place I once worked……

  2. Vlad is Mad says:

    Valuation is less relevant at market bottoms because E is depressed by recession. 2. FV PE is a function of yields. Lower yields justifies higher PE. 21 is fair given current UST yields. Next year SPX earnings peaked at 195. Lets slice it by 35% which gives us 126.75, a 21 multiple is 2661. Thus SPX is a little rich but not outrageous IMHO. It is worth noting that the trough in earnings might come sooner, so the 2021 number might be too negative. If 156 is closer to the truth, then 21 times is 3276. Just to emphasize, valuation is not a strong driver early in the cycle. It is not worth obsessing over.

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