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The irony is that forward P/E is more similar to reading the tea leaves in your cup: it’s speculation.
by dagmx 2y ago
The irony is that forward P/E is more similar to reading the tea leaves in your cup: it’s speculation.
- airstrike 2y agoFair and perhaps that was a bad metaphor in hindsight... But at least it's more connected to the actual current value of the stock seeing that it is defined by future not past cash flows It doesn't matter if those are the right cash flows, you're really trading based on the market's expectations of those cash flows anyway
- readthenotes1 2y ago"bad metaphor in hindsight" Clever! But it does make the opposition's point: while many will never acknowledge trouble in hindsight,it's much less common to acknowledge trouble in foresight ;)
- airstrike 2y agoI was wondering if anyone would notice it ;-) Re: trouble in foresight, analysts and practitioners try to account for that by creating scenarios. Note I cited the base case for the Morgan Stanley reports, but those also include a bear case and a bull case. Naturally those still depend on assumptions...