PE and Inflation

When inflation (and therefore the overall interest rate) is low, the present value of future cash flows is higher. As such, there is an inverse relationship between inflation and PE multiples. As inflation rises, PE ratios fall (and vice versa). Historically, the average PE ratio has been equal to 20 minus the inflation rate. See article here, WSJ.

Flawed Risk Surveys?

Most risk tolerance surveys contain similar questions, but behavioral experts suggest such questions may not be measuring what is actually intended. See article here, WSJ.