In a market that is meant to be so overvalued, why do some companies still have such low P/E’s?

Divya Mukherjee
3 min readJul 10, 2021

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Everyone keeps saying this market is extremely overvalued, which many companies definitely are. If everything is so overvalued, why are some companies still so undervalued? For example, ArcellorMittal has a dividend yield of %1, which has increased from the previous year, and a P/E of only 4, while it’s revenue has also grown over the past year. I’m not trying to pump this, just simply wondering why there are some companies like this that are so undervalued?

S&P 500P/E ratio DD, advice needed

So historically, the average P/E ratio for the S&P 500 has been 16

It’s currently sitting at a whopping high of 46, pointing to the market being highly overvalued.

P/E basically means how many years you’re willing to wait to make your money back if earnings were to stay the same. 46 years in this case, if earnings were not grow, but such high of a p/e ratio would still require a lot of growth which I think is not really sustainable at these levels.

I haven’t had the chance to experience a bear market before, but I’d like to hear from some of the more experienced investors for what the best way one can hedge themselves for a correction without putting money into bonds?

TLDR; Growth companies have enjoyed their run over the last 10+ years, but will they be able to justify it through earnings and maintain their pricing?

When do you decide to cut your losses?

When is enough enough? I have been Investing just since January of this year, and I have been in the green maybe a total of 2 weeks since then. This week I have lost 12% of my total investment. I believe in all the companies I’m invested in long term, but right now bad news after bad news has led to a sell-off. How do you know when the free fall will stop? It seems like investing has just given me anxiety, I’ve invested in companies from multiple different sectors and etfs and they’re all performing horribly, I don’t know if I need to sell and purchase other investments, or if I’d be selling at the bottom. Any advice would be greatly appreciated

Hypothetical — interest rates in recession

I have been trying to understand what would happen if the economy is gone into a recession?

Looking at the 2008 records Bank of England dropped from 5% to 0.5% by end of 2009 and now it is 0.1%.

Are we looking at potentially -3–4% rates? I find it a bit mind numbing as inflation is on the rise and loads of talks about a possible ‘crash’. But if the no 1 solution for recession is lowering the interest rates, how could it be applied in current already zero-ish environment. Inflation is going to reduce value of money and on top we would give banks money to keep our money…cant see that helping anything!

Needless to say, i am only talking about text book type idealised scenarios. I do appreciate the complexity of the finance world and its unpredictable nature. Thanks in advance.

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