FYI: “EARNINGS ARE GOING TO BE GREAT THIS YEAR!” your favorite stock clowns proclaimed at the top of their lungs. And they were right, but there is a P in the old PE ratio and it reacts to things like changes in liquidity, sentiment, global trade conditions, etc.
In this chart, from Bloomberg by way of the WSJ’s Daily Shot email, you can see this phenomenon illustrated – the contracting PE ratio stole all the benefits of rising earnings and dividends to bring us back to flat-on-year!
Regards,
Ted
https://thereformedbroker.com/2018/10/30/chart-o-the-day-how-the-contracting-pe-multiple-stole-2018/
