Price Earnings ratio dispersion is at its lowest level in twenty five years according to a new Goldman Sachs Group Inc (NYSE:GS) report. This means that stocks with very different earnings potential are being valued at the same multiple as each other. The trend is a worrying one for the stock market and the likely perpetrator is the market’s old friend, the Federal Reserve policy. Cause of tightness in Price earnings dispersion Value investing is another apparent cause of the increasing tightness of Price Earnings dispersion, according to the report. As QE drove up the prices of stock, investors began…
Value Investors Are Killing Price Earnings Dispersion
HFA Staff
The post above is drafted by the collaboration of the Hedge Fund Alpha Team.
