Price/Earnings Ratios

Macroeconomics and Price/Earnings Ratios

October 14, 2010

Is the stock market cheap or overpriced? We hear conflicting pronouncements daily on CNBC and other media outlets. The pessimistic camp believes the broad domestic and international economic scene is weak and weakening and therefore, almost all common stocks are overpriced. Historical price/earnings valuation criteria in this negative environment for this group are mostly irrelevant. [...]

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