In a well-supported article by zerohedge.com, the author suggests a “fix” to the current problems with price-to-earnings (P/E) multiples. Among the questions answered are: Can P/Es tell us anything about stock valuations during periods of earning recessions? Is a bear market closer than we think? If so, when is the best time to buy? What do today’s inflated valuations mean for long-term returns? Why are outcomes so different when earnings are adjusted to account for mean reversion? The philosophy and figures are more than interesting when examined across a nearly 100-year sample, as this review does. You can read the full story by Tyler Durden at the agency’s website.
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