QUOTE(mikehwy @ May 27 2014, 09:10 PM)
been thinking ir a long while....when we say expensive stocks or high pe stocks after all these years...shd we adjust the pe a bit higher when the macro environment and economy gets brighter? or shall we stuck to the "old" pe, roi, eps etc etc for punting?
pls comment. thanks
IMHO, financial ratios are the guidelines that used/try to evaluate the overall financial condition of a corporation.
Whether Macro environment or internal micro got better productivity that need to adjust the higher P/E ratio, EPS,
it not necesssary to adjust a higher rate, as fund mgr were based on standard used-ratios of the industry / sector
when analysing/"predict" the future whether to downgrade/upgrade/hold the industry/stock.
For me, as long as the 1) continue of near zero interest rate, 2) continue money printing machine,
3) Gradual inflation/housing/consumer confidence/GDP/manufacturing/employment/sales order ..etc..etc
datas improving/growth, hence it is a buy and hold. External ECB/Japan monetary policies may affect
the decision-making too. Stock valuation price is not expensive or cheap as now. Did u notice DJIA
continue vast expanding for the last 40 years? Every 10 years DJIA increased the points by 6k - 7k ..
Need to adjust higher evaluation?
Financial RatiosThis post has been edited by netmask8: May 27 2014, 11:05 PM