The annual moment of truth has arrived. Companies are publishing their numbers for the full year of 2013 and it is time for us all to “brace for a moment of particularly inconvenient truth”, says John Authers in the Financial Times.
Profits aren’t rising fast enough to justify stock-market valuations. The market soared last year – forward earnings multiples are about 16 times at the moment. That’s “well above the historical average” of more like 13 times.
It’s also worth noting that, since 1976, the price/earnings ratio has only been above 17 for about 5% of the time [...]
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