Markets are continuing to use speculative forward PE/raised earning estimates which are often proven to be false expectation as we can validate whether the Forward PE was reasonable.
The following comparative cross-period PE vs FPE charts are showing that forward PE is often used and market manipulation as forward PE is speculation. Even though forward PE and earning estimate is based on reasonable expectation, markets have proven that the forward PE was unreliable and overpriced.
DOW 30 PE & Forward PE as of May 22, 2009 on page 2-3
* Forward PE in average is showing around 15.
* We have not seen warning signs based on the forward PE forecast during the last year. * Note that no earning for C, AA, and GM with forward PE of C 13 and AA 15.5 while GM is still negative. * JPM PE is over 60. * Forward PE is unrealistic just same as we didn't see a warning signal during the last year. Forward PE didn't warn us about the market sell-off which we have seen during the latter half of 2008.
Validity of Forward PE
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