Why is B correct (underweight if p/e is above avg) rather than D (overweight if p/e below and underweight if p/e is below avg)? Or am i going crazy?
If the MRL is say 13.3X and you have a P/E that is 16.6X [overvalued] and you know that it’s going to be mean reverted to 13.3 [correct value] levels at some point in the future, So should’nt you short that stock?
doesn’t it work both ways though?
brother bilo Wrote: ------------------------------------------------------- > Why is B correct (underweight if p/e is above avg) > rather than D (overweight if p/e below and > underweight if p/e is below avg)? > > Or am i going crazy? it might just be me but your option for D doesnt make sense “overweight if p/e below and underweight if p/e is below avg.” If the stock is overpriced (higher P/E then average) then you should sell it or underweight, if the stock is underpriced (lower p/e then average) you buy it or overweight. Halo Bilo da rapest, you are my friend no? Is niiiiiiice
yes i am retard. this is what it should read: “overweight stocks if p/e is below its historical average, underweight stocks if p/e is above historical average” then again i haven’t been able to read or write a sentence without making a mistake in hours, so i may have misread to begin with.
yeah, now you got it. u must not eat de retard sandwich…it make your “chram” weak like sleve of wizard…
The question says: Underweight if below average, underweight it above average… you’re correct. I didn’t even see that.