The Importance of a High PE

When Microsoft hit its peak back in late 90s, it was one of the biggest, if not the biggest, stock as far as market cap went for that time. Even with all this great business success, because their PE was maybe not even double, they crashed about 50% when the stock market went through its crash. It took them a decade to go from where they were at their peak in 99 to that same market capitalization today. If you would have just bought that Microsoft at a high PE, your investment stayed flat while the rest of the market went up and continued to compound.