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Pastimes : Bad investing information/advice on the net contest
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To: The Other Analyst who wrote ()8/18/1999 3:49:00 PM
From: The Other Analyst  Read Replies (1) of 214
 
Outdated P/E ratio?
Lately I've been seeing a lot of references to the "outdated" p/e ratio valuation approach.
Two reactions:
1. a p/e never was a valuation approach in the real sense. it was always just a shortcut, with the underlying method being discounted cash flow.
2. what is new or old is not the p/e approach, but the growth rates associated with Internet. doubling times on the order of 100 days is new. That does not outmode the p/e ratio. It just means that it is not the right tool.

If an auto mechanic uses a computer to fix your car, does that mean the wrench that his predecessor used is "outmoded". I don't think so.
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