Why P/E Numbers Suck
from the welcome-to-wall-street-roulette dept
A good article that tries to explain away the cause of much of the tech world’s fluctuations by blaming the concept of the P/E ratio. While I will admit that people rely way too blindly on P/E ratios (and comparables) that doesn’t mean it’s a useless figure. It should be one of many tools that an investor uses to judge a stock. However, I agree that it’s certainly got its problems. I just am not ready to toss it out completely yet.
Comments on “Why P/E Numbers Suck”
Backwards
I think you have it backwards, Mike. The current mess in the stock market is because stock prices became completely disconnected from their P/E ratio, and they’re now falling back to earth. If more people had been relying blindly on P/E, the market wouldn’t have gotten so overvalued.