peg ratios / jeff saut

but we know that wall street will tell uns that this time it´s different......cklick on the headline to read more from jeff saut.

wir können sicher sein das dieses mal alles neu und anders sein wird. ..für mehr bitte auf die überschrift klicken.

So-called peg ratios for individual stocks have justly fallen out of favour. After all, there is no reason a stock should be considered undervalued just because its p/e multiple is below its earnings growth rate.

But at the macro level, Absolute Strategy Research (ASR) points out that the peg ratio at extreme levels has had a good track record in signaling market shifts. Ian Harnett, ASR managing director, says the peg ratio for the US market is now 1.83 times.

Since 1988, there have been 11 occasions when the ratio has risen as high or more. Each time, the market has fallen subsequently over six and 12months.

The average fall over six months was 8 per cent. Over a year, the average fall was 12.88%. ASR says when the peg ratio rises so high, it may signal the point where analysts have started cutting earnings forecasts but the market has yet to catch up. Given the track record, it is not something that should be dismissed out of hand.”