Billionaire Boys Club Member Forum (BBCMF)

[mick]

The price to earnings ratio tells you how many years of earnings it would take to get back what you pay for a stock.



In a healthy, normal market, the P/E ratio is about 16.



That means, it would take 16 years for a stocks’ earnings to equal the price.



But right now, the average stock in the S&P 500 has a p/e of 35.



That’s over twice the historical ratio!



Now there have been two other times in history that the p/e ratio has been this high.



The first was right before the market crash in 1929….