How closely correlated is an excessive PER to risk?

By Intelligent Investor · 5 Jun 1998

By Intelligent Investor ·
5 Jun 1998

Many companies trade at a premium to the market. There is nothing wrong with this, providing a similarly equal 'sustainable' earnings growth rate is evident. One of the more regularly mentioned concerns about the US stock market is whether the historically high PER that market is currently trading at is justifiable when considering the perceived risk to earnings if the economy were to slow.

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How closely correlated is an excessive PER to risk?

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How closely correlated is an excessive PER to risk?

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