tag:blogger.com,1999:blog-7294165939647321702.post2484985359308425876..comments2024-03-28T13:45:43.362-04:00Comments on <center><a href="http://www.barelkarsan.com">Barel Karsan - Value Investing</a></center>: PE10 WeaknessesSaj Karsanhttp://www.blogger.com/profile/04493152766022812984noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-7294165939647321702.post-66949126638812963562011-01-25T19:52:53.294-05:002011-01-25T19:52:53.294-05:00Hi walterlu,
I completely agree. I have a post co...Hi walterlu,<br /><br />I completely agree. I have a post coming out soon on a topic very much related to this.Saj Karsanhttps://www.blogger.com/profile/04493152766022812984noreply@blogger.comtag:blogger.com,1999:blog-7294165939647321702.post-4482395689159872882011-01-25T01:10:35.333-05:002011-01-25T01:10:35.333-05:00I think another important thing to consider is the...I think another important thing to consider is the amount of reinvestment companies are making compared to historically. Companies are paying out much lower dividends as a percentage of income, instead reinvesting the cash, so their earnings should grow faster. Not arguing whether this is more beneficial to shareholders... might be growth without value creation, but the investment and growth happened nonetheless. PE10 downplays the higher rate of change in earnings power compared to 10 years ago.Walterhttps://www.blogger.com/profile/04745318865555357144noreply@blogger.comtag:blogger.com,1999:blog-7294165939647321702.post-55456159422822690412011-01-24T19:07:30.451-05:002011-01-24T19:07:30.451-05:00Hi Trevor,
If your argument is that margins in th...Hi Trevor,<br /><br />If your argument is that margins in the last ten years are higher than they have been historically, then I would agree with you. If you are saying that margins are higher this year than they have been in past years, then I would say the "averaging" takes care of that.<br /><br />Hi obtuse,<br /><br />I agree, 20 is still high, and above the historical average.Saj Karsanhttps://www.blogger.com/profile/04493152766022812984noreply@blogger.comtag:blogger.com,1999:blog-7294165939647321702.post-60188297264465557142011-01-24T13:08:14.217-05:002011-01-24T13:08:14.217-05:00Good post Saj.
Even if we use today's PE8 of ...Good post Saj.<br /><br />Even if we use today's PE8 of 20.7, it would be a 26.2% above the long term average PE10 of 16.39. Furthermore, 20.7 would be a 31.2% above the long term median PE10 of 15.77.<br /><br />In any case, current valuations, PE10 or PE8 are well above the historical average. Valuations like these have, more often than not, led to mean reversions.the_obtuse_investorhttps://www.blogger.com/profile/04882450560686626871noreply@blogger.comtag:blogger.com,1999:blog-7294165939647321702.post-8828884442639404332011-01-24T10:44:54.227-05:002011-01-24T10:44:54.227-05:00What about the fact that corporate profit margins ...What about the fact that corporate profit margins are far higher than normal. A mean reversion or 'normalized number' would raise the ratio.tscottnoreply@blogger.com