Saw an article today proclaiming that the long term avg. PE ratio based on trailing earnings is about 14-15, while the long term avg. PE ratio based on forward earnings is about 11.
I'm not disputing these claims (I actually think they reflect generally embedded expectations), but something does not compute here.
A forward PE of 11 relative to a trailing PE of 15 implies 36% expected earnings growth.
Obviously long term earnings growth is not 36% pa, and so I think we can read something about the positive bias of the market into this.
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