Why Does Price-To-Earnings Ratio Increase?

(May 4, 1998) Warren #Buffett explains that the price-to-earnings ratio goes up when the stock market participants are optimistic with the prosperity of the business. With regard to the forecasting the price-to-earnings ratio, Charlie #Munger states that Warren and Charlie are great at forecasting the price-to-earnings ratio in the future because they only invest in predictable and simple businesses.


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