05/17/2013

Think stocks are overpriced? Think again.

Think stocks are overpriced? Think again.

By Paul Price

Forward P-E Ratios v. Interest Rates Sep 1978 - Apr. 2013

High interest rates justified extremely low P/Es in the late 1970's - early 1980's. When investors could get as high as 15%  - 18% on insured bank CDs, they had little appetite for stock market risk.

Today, with near-zero interest (ZIRP) available on CDs, bonds and money markets, P/E multiples should be greater than average. 

Instead the forward multiple is barely above the long-term average.  Relative to fixed income, stocks are still cheap.

May 17, 2013 12:00:00 AM | Newsletter Articles, Value Investing

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I'm editor at Phil's Stock World, and editor for Stock World Weekly. My background is in the biological sciences, and law. After a brief career in the legal field, I changed directions and am now working as an editor, and very much enjoying my experiences in the editing world.

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