Stocks are at their most expensive since the dot-com crash two decades ago, according to Wall Street’s standard valuation metric. But the forward price-to-earnings ratio is broken, and alternatives show the market is cheaper, even if it’s still no bargain. The advantage of the PE ratio is it measures the two things investors really care about: the price of a share in a company and the earnings that share will produce in the near future. A high PE ratio suggests shareholders are optimistic that earnings will grow a lot beyond...

Source: Wall Street Journal May 13, 2020 10:07 UTC