Historical Analysis

History doesn't repeat, but it often rhymes.

Is Apple expensive at a 30 P/E ratio? You can't answer that by looking at the number in a vacuum. You have to look at its history. If Apple has traded at an average P/E of 15 for the last decade, then 30 is incredibly expensive. If it usually trades at 35, then 30 might be cheap. The Historical Analysis tool helps you contextualize current valuations.

Mean Reversion

The most powerful force in financial markets is Mean Reversion. Prices and valuations tend to move back towards their long-term average over time.

• If a stock is trading 2 Standard Deviations above its average P/E, it is likely overvalued.
• If it is trading below its historical average, it might be a buying opportunity ("Margin of Safety").