Best Valuation Approach Depends On Sector, Business Cycle

Most of our readers don’t need to be convinced of the importance of factoring stock valuations into their investment decisions, but that doesn’t mean value investor necessarily agree on how best to go about it. Price to earnings (PE) is one of the most popular metrics, but according to Goldman Sachs’ portfolio strategy team, the best tool depends on which sector you’re looking at what part of the business cycle it’s in. “Using valuation to select stocks is effective at both the index and sector level but different valuation metrics should be used to pick stocks depending on sector,” write…