Low IQ = to buy too many 50+ P/E stocks.
But it’s all Trumps fault of all the postive economy, low unemployment, low interest rates, all the good news, over confidence in the future and stupid people paying too much for stocks of course.
Interest rates were way too low, for too long. I Disagree with Trump.
Here is what remains true: from Nasdaq website itself.
“In many ways, there has been a changing of the guard on Wall Street over the past several years. The transition from on-the-floor traders to algorithm-based digital trading has been well-documented, and even our preferred methods for determining value and growth potential have changed.
With that said, one of the most polarizing new trends on the stock market relates to the use of traditional valuation metrics on tech stocks-or the lack of use, I should say.
For better or worse, investors are quick to disregard old-school methods like the P/E ratio in favor of heavy optimism about the future.
It's the reason that Tesla TSLA continues to climb despite disappointing earnings reports, and it's why Amazon AMZN has become one of Wall Street's hottest stocks-even with its "F" grade for Value in our Style Scores system.
Interestingly enough, according to our Zacks Sector Rank data, the broad "Computer and Technology" sector has an average P/E ratio of 21.08, which is significantly "worse" than the S&P 500 average of 17.22.
Of course, a lot of this comes with the territory and is direct result of exposure to certain market conditions that are unique to tech companies. However, that does not mean we cannot have a little fun with it. Check out these three popular tech companies with ridiculous P/E ratios:
1. GoDaddy Inc. ( GDDY )
Trailing 12-Month P/E: 171.68
A leader in domain name licensing, GoDaddy skyrocketed to fame thanks to a series of raunchy TV commercials that had very little to do with its business. Regardless, the company is good at what it does. GoDaddy has only recently cemented consistent profits, but investors were willing to pay more for an industry-dominating internet stock with exciting growth prospects. Looking ahead, the company is expected to improve its earnings at an annualized rate of 20% over the next three to five years, so investors should expect this valuation to become less stretched over time.”
3 Popular Tech Stocks with Insanely High P/E Ratios
https://www.nasdaq.com/article/3-popular-tech-stocks-with-insanely-high-pe-ratios-cm921692
https://www.profitspi.com/stock/view.aspx?v=stock-screen&uv=100707
“If low interest rates indeed justified higher P/E ratios, as the bulls have argued for much of the last decade, consistency would require them to argue that P/Es should now be lower than in late 2015.
Consistency, though, appears to be the hobgoblin of small minds.”
“My suggestion for the next time you confront an adviser who for years has relied on low interest rates to justify high P/E ratios: Ask whether those fair-value P/E estimates have come down since December 2015. The answer will tell you a lot about how seriously he takes his own arguments.”
https://www.marketwatch.com/story/n...d-investors-make-of-high-pe-ratios-2018-09-28
