Are P/E Ratios Good Predictors?
A recent article published by The Vanguard Group examined whether using price-to-earnings (P/E) ratios for the stock market are effective tools for ascertaining its value. P/E ratios have swung dramatically over the past two years, affected by big swings in market prices and whether the calculations use trailing or expected earnings. The article also suggests which factors should govern investors' decisions.
Click here for the article from Vanguard.