However, its use as a basis to view the market as a whole (and its historic norm) can give a clear basis to argue for a long term bull or bear market environment, upon which, a trader can confirm a cyclic position and thus is another confirmation of the fragility or strength when looking at yield and market stability.
Julian I would tend to agree.
That is why an ETF is preferrable to individual stock choices, as you are looking at a sector, rather than an individual business.
Also, as a professional analyst will normally select a fair and best representation of a sector to be represented, you have ( hopefully ) any true dogs weeded out.
The P/E ratio is available on the web freely, as is the selection of ETF's, here they are.
Ken Fisher is the son of Phillip Fisher, ( who coined the term scuttlebutt ) and and is a fund manager in his own right.
He wrote a book called "Super Stocks" and also writes for Forbes, their column "Portfolio Strategy" He also in a second book popularised the Price to Sales ratio, which at it's heart is very similar to the P/E ratio.
As most of us, he has looked at a variety of ways of engaging the market, and has currently returned to his fathers roots of Growth Stock investing.
However your post does bring up some very relevant criticisms of statistically based articles, trading methodologies, drug studies whatever.
3.....lies, damned lies, & statistics.
All are relevant, and need to be addressed rationally.
I would suggest the best way is to explore the statistical evidence yourself, paying particular attention to the "methodology" employed, as this really is the key to any reliability in a statistical result.
From his article..............
1...He raises the point regarding demand for stocks not showing an inverse relationship to price.
This is correct, but entirely misses the point in my opinion, as you are not trying to buy a "hot" stock with a low P/E, you are trying to buy "cheap earnings"........there is a very important difference.
2......he advocates high P/E...........as in a growth stock. I have statistics showing the opposite, however, the point is the selection of true growth stocks, in their relative infancy is no easy matter, if it was, more would be sunning themselves on yachts.
3......regarding his study, having not read it, I can't really comment, however, the studies in favour of a low P/E are robust, and sound, and I use them myself, and have live examples that you can easily follow. There is also an example in the article, that I will update, and we can track it in real time.