Q: Should investors change their goalpost metrics of valuing companies when investing?
Nowadays many complain about seemingly high valuations of many companies.
In the past, companies with a high P/E ratio would raise alarms - now it seems it's de rigeur - Apple has a P/E ratio of 43 for example! Does this go hand-in-had with investors accepting very low interest rates?
At first I thought it crazy that a company like Apple would earn $1 for every $43 dollars of share price but then realaized the US 10yr treasury currently gives me $1.09 for every $100 of principal .
Should the yardstick of what constitutes fair value be changed in light of these lower interest rates?
I know there are many ways to value companies but what would you say would be a 'fair' P/E ratio nowadays? Benjamin Graham had a formula and I'd like to see your opinion.
Nowadays many complain about seemingly high valuations of many companies.
In the past, companies with a high P/E ratio would raise alarms - now it seems it's de rigeur - Apple has a P/E ratio of 43 for example! Does this go hand-in-had with investors accepting very low interest rates?
At first I thought it crazy that a company like Apple would earn $1 for every $43 dollars of share price but then realaized the US 10yr treasury currently gives me $1.09 for every $100 of principal .
Should the yardstick of what constitutes fair value be changed in light of these lower interest rates?
I know there are many ways to value companies but what would you say would be a 'fair' P/E ratio nowadays? Benjamin Graham had a formula and I'd like to see your opinion.