Five Surprising Insights About Stock Indexes and Funds
Money For the Rest of Us
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The Importance of Earnings Yield
If we calculate or if we derive an average price to earnings ratio for international small cap value, it's 19. But if we actually use the PEs to calculate it, it's 28. That was a surprising insight. And that's why I think using earnings yield on a trailing 12 month basis and on a forward looking basis based on analyst estimates is actually, to me, more intuitive.
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