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Greetings Keith,

TMF1000 wrote this in his post:

“Another common theme might be stocks above the market multiple. SCSS and BWLD fit this category. If this tends to be the type companies you are investing in and they are mostly down you might look for those that have a market multiple or below market multiple to add to your portfolio”.

I understand multiples – P/E, P/Book, P/ROI – but I don't understand the context in which the term is being used here. Could someone explain?

I think the context is that if the companies you are investing in are down and tended to be above average in terms of a multiple, sometimes referred to as growth stocks, then you may want to consider some value stocks which would be those with lower multiples than the "norm".

By "norm" this is the market multiple which is the average of all the stocks in a sense.

If this doesn't explain it, could you refer to what doesn't make sense specifically? Basically, the way I read the quoted part is that some people will be highly valued stocks and if this tends to be what one buys then they want may to consider buying stocks on the other end of the spectrum in a sense.

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