alt Hacker NewsIf you look at the chart at the bottom comparing Dec 99 to today....
> during the internet bubble of 1998-2000, the p/e ratios were much higher
That is true, the current players are more profitable, but the weight in SPX percentages looks to be much higher today.
Replies
cal_dent • last Thursday at 2:23 AM
i also wonder about p/e ratio comparisons over time because our world view of what long term economic growth is going forward is less now that it was then. That is always subtly implicit when we think about p/e ratio. So what's to say a 30x p/3 isnt equivalent to a 40x then
It seems to me that it would be a lot easier for that market concentration to revert to the historical mean without catastrophe, than for P/E ratios to revert to the historical mean without catastrophe.
(I think a reasonable argument can be made that P/E ratios today should be higher than the historical mean, or rather that they should have trended up over time, based on fundamental changes in how companies compensate their shareholders.)