Share price predictions require a rethink of valuation methodology

Professional Adviser
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share prices having fallen so far, the s&p500 continues to boast a p/e of almost 50 on the back of proportionally low earnings. nick dewhirst asks which statistics to believe

After the market crash, are shares now cheap enough? The trite answer is that this depends on what one means by cheap. The sensible answer is to decide what measure of value is most meaningful. I base my answer on Wall Street, because this is where most investors look for leadership and because that is where the data is most controversial, but not because the conclusions are necessarily true for the rest of the world. There is a wide choice of valuation criteria, some of which are based on balance sheets, while other are based on income statements. While widely quoted by others, Pri...

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