That is why I have been so sceptical of stocks like Tesla in the past. Even if they do grow into the most successful car company in the world that was already in the price. where can they go from there?
However, mature stable companies are worth investing in if they continue to earn profits. Consider energy companies etc. they are long established companies that aren’t going to experience explosive growth any time soon, but they make huge profits and return a chunk of that to shareholders as dividends
What @Dave really means is that high P/E can be used as a proxy for “growth” stocks (P is high because that E is expected to go up). Look up AMZN’s P/E to understand this. There is a perceived upside and that is why the P/E is large (caveats in place here, ‘hi’ and ‘low’ are sector based). You are not mistaken in your understanding: that P/E slides to “market norm” as the (perceived) growth in earnings diminishes.
Also see
A “pop” article that is easily digestible and opens various doors to explore:
I had an idea at the time that the looming end of tax year could of helped the rise we saw in the value of stocks. So I didn’t invest in the last half of the month of march.
No. Because (a) the clever money hasn’t predicted what is going to happen to that degree - a whiff was all that was needed to begin to move. (b) the herd is still moving.
A rout can take take a long time - go back to 2000 to see how long many of the then stars took to fall to their low points ( I don’t remember the details but then it was about 2.5 years).
Yes, they have changed the valuations (price) … but I guess I interpreted your previous message to mean the final low has been priced in (which it hasn’t).
bear market territory
market territory. It was in intraday…
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