How inflation affect P/E? High inflation tends to depress P/E ratio?
Yeah. Think about it from a purchasing power perspective.
your company earnings don’t go as far but stock price stays the same. Basically errosion of value assuming no change other than inflation
Not sure i get it. You mean P the same but earning decline?
People tend to discount the price of the stock to account for an ‘inflated’ earnings #.
What you are saying will raise the P/E…isn’t it? Price stays same and earning go down. Don’t think that’s true though.
Got it. So investor give company less value § for an “inflated” earnings (E). P/E tends to be low. Thank you!