Neither growth nor reasonable price
Peter Lynch's key to success in stocks no longer works as the P/E-to-growth gap is currently the widest since at least 1995
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FOR Peter Lynch, the legendary Fidelity Investments fund manager who returned almost 30 per cent a year in the 1980s, the key to success in stocks was buying growth at a reasonable price. Right now, you can't find much of either.
A look at the Standard & Poor's 500 Index shows price/earnings (P/E) multiples are about 1.7 times higher than the rate at which analysts expect profits to grow over the next five years, according to data compiled by Yardeni Research Inc. That difference, a version of something known as the PEG ratio that Mr Lynch favoured, is the widest since at least 1995.
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