Is P/E Indicator Useful For Creating High Profitable Portfolio? by Bargain Value
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Today, we will continue historical tests of indicators and look closer at P/E ratio. It is an indicator of cheapness, but we would like to know, how effective is in pointing out “pearls” and helping in creation profitable portfolios. We will compare P/E results with former tests of P/BV and P/S.
All methodology of testing will be the same as in the former experiments, so if you’re not familiar with them, please go back and check (First article in this category).
We divided all stocks in 10 portfolios:
- Extremely cheap stocks
- Very cheap stocks
- Cheap stocks
- Quite cheap stocks
- Slightly cheap stocks
- Slightly expensive stocks
- Quite expensive stocks
- Cheap stocks
- Very expensive stocks
- Extremely expensive...
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