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Strategies & Market Trends : Investor sentiment surveys - a technical indicator
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To: CJ Quantumwell who wrote (71)6/30/1997 9:35:00 AM
From: Anaxagoras   of 167
 
<< I wonder what is the rule of thumb for the growth rate to PE ratio. For example, for a stock traded at P/E 20 or 100, what's the respective growth rate expected in the market?>>

It is commonly held that in a fairly valued situation the p/e is the same as the growth rate. Thus, using your example of a p/e of 20, a stock with a growth rate of 10% is overvalued, at 20% it is fairly valued, and at 30% it is undervalued.

I don't know what the growth rate of the S&P 500 presently is.

Anaxagoras
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