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0 pointsadam_arthur3y ago0 comments

Some stocks, yes.

Things like DASH which have high sales multiples relative to what a realistic margin is for them long term. Or software stocks like NET that are still over 10x sales, without a sufficiently commensurate growth rate to justify it.

A company with a 20x PE implies a 5% yield this year. I can get 5% on a AAA bond effectively risk free, or 4.5% on a treasury absolutely risk free. There is close to 0 fundamental justification for a lot of tech stocks still.

CMG with 50 PE implies a 2% yield. Why? What logic is there to justify this? You can invent some story about 20 years from now, or I can take a guaranteed return that’s many times higher today.

Some stocks are very fairly valued though, valuations are all over the place right now and not consistent within sectors. Should Apple really have twice the valuation multiple as Google? Not in my opinion

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MuffinFlavored3y ago

> A company with a 20x PE implies a 5% yield this year.

Isn't this kind of a useless stat?

https://www.slickcharts.com/sp500/returns

https://www.multpl.com/s-p-500-pe-ratio

the market typically doesn't follow this "this P/E must yield this much return" rule from what I can tell. We've had many many many 8-10%+ ROI years despite whatever the "this P/E implies this much yield/return" rule dictates.

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