Forget CAPE Ratio, Peter Lynch Tool Has S&P 500 Getting Cheaper

Ted

FYI: By virtually any measure, U.S. stocks are expensive. Under one especially harsh lens, the cyclically adjusted price-earnings ratio popularized by Robert Shiller, equities relative to 10 years of profits are more stretched than any time in a century, save the dot-com era.

But there’s still a methodology that bulls can take comfort in -- price not just to earnings, but to earnings growth. Favored by legendary investor Peter Lynch and known as the PEG ratio, the technique takes the standard valuation snapshot and adds time -- time for a stock to grow into its price.
Regards,
Ted
https://www.fa-mag.com/news/forget-cape-ratio--peter-lynch-tool-has-s-p-500-getting-cheaper-36555.html?print

bee

@Ted, Thanks for the article.

Last line from the article say it all:

“CAPE tends to be too pessimistic and PEG may be too optimistic,” Yardeni said by phone. “The truth may lie somewhere in between.”