3 ms·

With 10+% annual inflation in US in the last 2-3 years, 20+ P/E doesn’t look bad at all. Actually anything under 40 or so should be a strong buy.

• metadat 2y ago
  Based on what?
  • s1artibartfast 2y ago
    P/E ratios dont account for inflation. IF the P/E is 40 and inflation is 10%, you will break even in 17 years, not 40 years. If P/E is 20, you break even in 12 years. Inflation has a similar but more dramatic impact on housing because you can leverage your investment with the loan.
    • ffgjgf1 2y ago
      > ratios dont account for inflation For future inflation. It was relatively low between 2010 and 2020 and has been reducing at a fairly fast pace recently. It’s not obvious it won’t go back to the baseline.
      • s1artibartfast 2y ago
        They don't account for any inflation at all. I am just explaining how inflation influences p/e interpretation. Everyone has their own model of what they think inflation will be in the future, which they use to judge PE and roi.