Upheaval needed to restore confidence

Much nonsense has been written in the past two years about equity valuations. We read that we should ignore old fashioned, tried and tested measures of valuation. Instead, new measures were invented that had a lower multiple attached to them and made expensive shares look cheap. Rather than look at earnings, assets and cash, many analysts were concentrating on sales multiples and, through the skillful use of complex discounted cashflow models, were able to create price targets that resulted in predictably laughable results. I remember a top-rated analyst set a £40 price target on a FT...