Tag Archives: forward P/E

The forward price/earnings (PE) ratio is probably the most popular way to measure value in the stock market - when the forward PE is above average, the market is expensive and future returns will be low and, when the PE ratio is below average, the market is cheap and future returns will be high. Putting such popular rules of thumb aside, what does the forward PE really tell us?

"The end is near" has been the bears' dire prediction since the start of the bull market on March 9, 2009. This year's rally to new record highs suggests that the bears have lost their credibility and that investors are becoming increasingly convinced that the end is actually still far off.