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If the small cap valuations are totally wrong, shouldn’t some simple measures like P/E show it clearly? Edit: The P/E values on Russel 2000 seem to be almost d
by jpalomaki 7y ago
If the small cap valuations are totally wrong, shouldn’t some simple measures like P/E show it clearly?
Edit:
The P/E values on Russel 2000 seem to be almost double compared to S&P 500 [1]. Also some point out that the value is not correct as it leaves out negative earnings which are common among small caps [2].
[1] https://www.wsj.com/market-data/stocks/peyields https://www.wsj.com/market-data/stocks/peyields
[2] https://goldco.com/russell-2000s-price-to-earnings-ratio-is-high/ https://goldco.com/russell-2000s-price-to-earnings-ratio-is-...
- omarhaneef 7y agoI think the point is people use the measures that you can clearly see easily (like the P/E), and therefore you don't go down to the level of the stock (oh, temporarily raised earnings, forecast for reduced earnings, and as you point out, negative earnings etc). Note: this is not my argument, but what I understand Burry to be arguing.