[s1artibartfast]

P/E ratios dont account for inflation.

IF the P/E is 40 and inflation is 10%, you will break even in 17 years, not 40 years.

If P/E is 20, you break even in 12 years.

Inflation has a similar but more dramatic impact on housing because you can leverage your investment with the loan.

[ffgjgf1]

> ratios dont account for inflation

For future inflation. It was relatively low between 2010 and 2020 and has been reducing at a fairly fast pace recently. It’s not obvious it won’t go back to the baseline.

[s1artibartfast]

They don't account for any inflation at all.

I am just explaining how inflation influences p/e interpretation.

Everyone has their own model of what they think inflation will be in the future, which they use to judge PE and roi.