P/E = Perception & Economics: Why Markets Move on Narratives Before They Move on Numbers
For generations of investors, the Price-to-Earnings (P/E) ratio has been treated as one of finance’s most fundamental metrics. A simple equation dividing a company’s market value by its earnings, the ratio is often presented as an objective measure of valuation. Yet the history of financial markets suggests a more complicated reality. P/E ratios rarely reflect…