Investors are reading CAPE all wrong.
A CAPE ratio of 26.91 does not prove the stock market is overpriced. The stock market today may be overpriced or underpriced. CAPE using a historic average as a benchmark just doesn’t tell us one way or another
No company under consideration will even be close to scrambling to pay its creditors.
There needs to be a skilled knight in the castle to protect and enhance the moat.
Some companies are in the seemingly fortunate position that they can maintain profit margins simply by raising prices.
Buffett uses Owner Earnings to judge the performance of a company and its management. He also uses Owner Earnings to assess the intrinsic value of a company.
Doing what everybody else is doing at the moment, and therefore what you have an almost irresistible urge to do, is often the wrong thing to do at all
Be prepared financially and psychologically to live through a series of bull markets and bear markets because in the long run common stock will pay off enormously and the next bull market will carry prices far higher than this one
Price earnings ratios are a frail and shifting basis for determining fair value. They do not force investors to think through all the factors that go into a deep assessment of fair value.
Prices in the stock market are never a reliable guide to the fair value of a stock.