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system
why should the p/e ratio of a growth stock match its percentage earnings growth rate?
user
this is only a rule of thumb. peter lynch popularized it; the ratio pe/growth is often called the lynch ratio. at best it's a very rough guideline. i could fill up this page with other caveats. i'm not saying that it's wrong, only that it's grossly incomplete. for a 10 second eyeball valuation of growth stocks, it's fine. but that's the extent of its usefulness.
assistant