Latest baseball scores, trades, talk, ideas, opinions, and standings

Archive for the ‘cheap’ Category

>Stocks Aren’t Cheap Enough Yet

>By Keith Fitz-Gerald
Investment Director
Money Morning/The Money Map Report
For many investors, a low Price/Earnings (P/E) ratio is a sign of value.
But don’t you bet on it – at least, not yet.
According to Michael T. Darda, chief economist for MKM Partners LLC, analysts have overestimated earnings by an average of 30% to 35% in the last three recessions. For millions of investors who use low P/E ratios as a litmus test for selecting their investments, that’s going to be a rather unpleasant shock.
If Darda is right, and our research seems to suggest he is, so-called “cheap stocks” may not be all that cheap. For proof, we can turn to some plain-old high school math. P/E ratios are calculated by taking the price of a stock (the numerator, or the “P”) and dividing it by earnings