Investors ask if equities are now cheap

After witnessing three years of falling stock markets, investors are justifiably asking whether equi...

After witnessing three years of falling stock markets, investors are justifiably asking whether equities are now cheap. A simple look at investors' favourite yardstick, the P/E ratio, would suggest not. While the current P/E ratio on the FT All-Share index, at 19, is lower than it has been since 1999, it is still higher than it ever reached in the 20 years previous to 1999. More interesting than the UK market's P/E ratio is the current dividend yield, which stands at 3.5%. For investors wondering whether to take out a mini or a maxi Isa, that should look fairly attractive. But the ...