Wincing at US Market Valuations
One of the things that I have heard many times over the years is that lower interest rates equal higher equity valuations. To be honest, I always struggled to understand why that relationship would be dogmatic. In the past, I reconciled the idea by thinking about the price-earnings ratio (PE-ratio) as an earnings yield, which is simply the inverse of the PE-ratio. If the PE-ratio is 20, then the earnings… Read More