Today I did a quick review of the 100 top stock gainers from Yahoo. I counted the ones that had ANY P/E at all and there were 32 of the 100 or 32%.
Now, if I were to look at those with a P/E, there were a good number with very high P/E’s.
What this little informal survey tells me is that speculation is still “alive and well”. Lots of "investors" are "living on a dream" of future profits, even with the strong headwinds of accelerating interest rates and inflation.
Interestingly, we have been seeing P/E compression in many stocks for a while now and the economic environment has not yet hit the “E” (earnings) of most companies.
Speculation is still going strong. Those speculating haven’t been beaten enough yet and there has to be a beating. So, in my opinion, we still have a good amount of downside to go.
Be smart, be well-read, be aware and be successful.
“To ask may be but a moment's shame, not to ask and remain ignorant is a lifelong shame.”
- Jigoro Kano - Founder of Judo
