Its still stocks for the long run
...P/E ratios. Discussion Prior to the technology bubble in the 1990’s, Siegel’s advice to investors; buying and holding stocks for the long term, was considered to generate a more profitable return than that of bonds. There was a flaw in Siegel’s teachings; he did not inform people to be aware of the noise involved in the technology stocks. An investor who is aware of the “manias,” (the noise in the market) will have an advantage over others because they will recognize this bubble and stay away. Siegel’s research proves that investors will overpay for stocks with growth while the strong companies, containing low P/E ratios and high dividends, will be most profitable. “The great growing companies are not often the ones that give you the best returns; the tried and true triumph over the bold and new.” (Siegel) Siegel states that growth stocks are not necessarily deemed as poor investment decisions. The intelligent investor who knows when to buy and sell, growth stocks, could receive the greatest benefits. If the stock is prices over 30% its earnings, it is not the time buy the stock; but if it is priced lower than its earnings and appears to be under-bought, buy. As long as the stock is not to overpriced, it might be an opportune investment. Siegel predicts that the future market will generate stock returns of approximately 5-7%, lower than the market historically (7%). However, he forecasts that the US market will be booming with growth. The baby boomers are retiring; the younger population is more educ...