The PE Ratio and Stock Market Performance2

The P/E Ratio and Stock Market Performance

World Capital Management favors low price-to-earnings technology indexes. Our investment strategy is based on the following in-depth study by the Federal Reserve Bank and numerous other studies.

The U.S. stock market enters the new millennium with five consecutive years of exceptional gains. The S&P 500 index has gained more than 18 percent each of these five years and its value has tripled since 1995. Whether these hefty gains will continue is an important question for many people. Investors obviously care because stock price movements directly affect their wealth. More generally, large stock price movements may affect consumption and investment spending—and thereby influence the overall performance of the economy.
Click here: https://kansascityfed.org/publicat/econrev/PDF/4q00shen.pdf

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