The forward price/earnings (PE) ratio — the price of the S&P 500 divided by the expected earnings of those S&P 500 companies — is probably the most popular way to measure value in the stock market. But what does it really tell us? One popular rule of thumb is that when the forward PE is above average, the market is expensive and future returns will be low. And when the PE ratio is below average, the market is cheap and future returns will be high. That's based on a pretty rough summation of ...
Everything we know about PE ratios crammed into a useful, yet somewhat confusing chart
Business Insider - 31 Dec 2015 15:19
The forward price/earnings (PE) ratio — the price of the S&P 500 divided by the expected earnings of those S&P 500 companies — is probably the most popular way to measure value in the stock market. But what does it really tell us? One popular rule of thumb is that when the forward PE is above average, the market is expensive and future returns will be low. And when the PE ratio is below average, the market is cheap and future returns will be high. That's based on a pretty rough summation of ...
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