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That is true for businesses with "reasonable" P/E multiples of ~5 or less. When a business has a P/E multiple of >100+, a significant portion of the investment
by cwkoss 6y ago
That is true for businesses with "reasonable" P/E multiples of ~5 or less.
When a business has a P/E multiple of >100+, a significant portion of the investment is speculative rather than a rational projection assets and future earnings.
It's really hard to make a rational value fundamentals argument for why anyone is willing to invest in TSLA, with its current price putting its P/E of 1700.
- erichocean 6y agoSiri, what is Amazon's P/E ratio?
- gspr 6y agoBest ask Alexa.
- creddit 6y agoP/E of 5 is really small. Historic P/E ratios are multiples of that.
- thekyle 6y agoThere are plenty of value ETFs for those who want stocks with low P/Es. Historically value stocks have even outperformed growth stocks. Also, the long term average P/E ratio is 15. Stocks haven't really had P/Es less than 5 since the Great Depression.
- cwkoss 6y agoThanks, I've never looked into ETFs with this thesis before. Could be an attractive investment. Found this interesting list of average S&P500 P/E over the years https://www.multpl.com/s-p-500-pe-ratio/table/by-year https://www.multpl.com/s-p-500-pe-ratio/table/by-year Average P/E is 15.79, higher than I thought it was.
- robocat 6y ago> “reasonable" P/E multiples of ~5 or less. So you are saying more than 10% yield should be normal? (Assuming normal payout ratio is 50% - highly variable).