Читать книгу Cotter On Investing - John Cotter - Страница 18

The chart shows that using the 1 year forward PEs as your guide, the world markets have been significantly undervalued throughout 2009 and 2010 as the market PEs have been significantly below the long-term average (shown on the chart at just above 16).

I find the PE a better guide to value in the general markets than it is for individual shares.

It also helps to inform the timing of investment. There is plenty of historical evidence that shows the market PE is inversely correlated with subsequent stock market returns. In plain English this means that purchases made when market PEs have been below the long-term average (as they are now) have made more money in subsequent years than purchases made in years when the PE was relatively high.