I’ve posted Entry #11 in the Investing: The New Rules column at the Death by 1,000 Papercuts site. It’s called Determining Stock Value Using P/E10 and asks why buying stocks cannot be more like buying peanut butter.
Juicy Excerpt: When you pay $14 for each dollar of annual earnings, it will take 14 years for you to break even on the investment. Once you reach the break-even point, every dollar of earnings generated from that point forward is pure profit. From the break-even point forward, your gains just grow bigger and bigger and bigger. An index fund with a P/E10 of 14 represents a very good deal indeed. Buying into value propositions like that will in time make you rich.