Quote Originally Posted by Heavy Metal View Post
The Aust market is nowhere near a valuation high. Current PE of 13 is lower than the 15 year average.
You've just committed the very same crime you accused W69 of.

The Australian market is now made up of a quite different earnings mix thanks to a multi-commodity boom. This boom hasn't been in play for most of the last 15 years (Quite literally the opposite). On average the earnings of mining companies just don't get valued as much as the earnings of service companies because they are capital intensive and much more cyclical and much more volatile (i.e. in an uncertain world they represent a sector with one of the least amounts of certainty). So a quantitative measure of PE doesn't encompass the qualitative factors of earnings mix, sustainability and volatility. Have a look at service companies... insurers, retailers and the like and PE ratios are hardly enticing.

...and conversely even if we ignore the mining factor the overall PE might just be measuring the market's view of future earnings, future inflation and future discount rates.