by David Kranzler
Investment Research Dynamics
The discussion about p/e ratios and other valuation ratios derived from Company-issued GAAP accounting financials is idiotic. The GAAP accounting allowances have been liberalized beyond a Bernie Sanders wet dream over the last 20 years. The p/e ratio at the peak of the tech bubble is completely different from the p/e ratio at the top of the 2007 stock bubble which is completely different then the p/e ratio now.
If 1999’s or 2007 GAAP standards were applied to today’s earnings, the P/E ratio on the S&P 500 would be at least as high as 65 p/e ratio registered in 2007. By several other metrics, most notably market cap/sales ratio, the current stock market is by far the most overvalued in history.