In this series of essays, each designed to demystify an aspect of the arcane language used by investment professionals, we have landed on the subject of ratios (the relationship between numbers) and we now consider a couple in some detail: first, a little revision on the price/earnings (P/E) ratio and then onto the price-earnings-growth (PEG) ratio.

Predictably, the aggressive interest rate policies adopted by central banks has had some effect.  The policymakers’ intention was to temper inflationary forces by subduing the purchasing capacity of the consumer.  However (at least to date), consumption patterns have been less affected than anticipated, and it is the financial system itself that is bearing the brunt of central bank tightening.