Why P/E Ratios Are for Losers

Sometimes you can link high P/Es to inane valuations and irrational markets, but that's not always the case. Simply put, if you rely almost solely on valuation or some other set of quantitative metrics, you're likely to get burnt. High P/Es often reflect investor confidence in businesses rolling on all cylinders with no end to rapid growth in sight, not unfounded and overly-optimistic expectations.