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Analyst Pin-board PE ratios and valuations

  • One dilemma faced by investors is not necessarily whether the ‘E’ is correctly priced in the P/E ratio but whether the long-term trend in ‘earnings growth’ is reflecting the ‘real GDP’.
  • US nominal GDP is growing at its highest rate in the past twenty-five years.

Let’s start by saying that this writer has stopped believing in P/E ratios about 20 years ago when the Nasdaq bubble imploded. Too many companies used accounting ‘shenanigans’ to manipulate earnings. In 2000, the one year forward P/E of many well-known US tech stocks was out of what we could imagine sustainable (Table 1).

Provider
Viet Dragon Securities
Viet Dragon Securities

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Analysts
Son Tran

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