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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: jeffbas who wrote (18430)	1/13/2004 9:18:52 PM
From: Spekulatius	Respond to of 78740

< i> In my opinion, what counts is NOT the market P/E but how high the market P/E is relative to competitive returns on safe fixed income. A P/E of 20 on that basis I will bet is not unusually high. Jeff you are absolutely right and Malkiel states that a large part of the P/E ratio changes are due to changes in LT interest rates. This does mean pricing stocks such that a forward return of 5%/p.A can be expected when LT interest rates are at 4% as is currently the case is somewhat rational.