so ill take a stab at a question i dont fully understand nor are qualified to answer but.--


if bonds are 5% thats the equal of a stock with a 20 to 1 p/e ratio. correct? that company is making 5% return. okay? thats why im against paying up for stocks with high p/e's.


now it doesnt matter what the s/p is trading for as its earnings are growing at 10%. so your earn over bonds is double. correct or am i off here.


so i would buy if i was willing to take the added stock risk for double the return, for more risk or volitivity(maybe just perceived).


thats why the stock market competes with fixed return things. if the yields are too low, and ratios get too high it becomes better to put your money in fixed returns.


as far as knowing how much to buy i dont know that as you may not buy any.


i use p/e to value a stocks current and its future worth. but most stocks are overpriced to their value. the proof is that when private companies are sold they sell for far less than public ones. thats also why many companies go public so that the owners can maximize their gains, as the public generally pays way too much. they do go public to raise expansion capital as well but thats another story for another day.