1. When company are at PE 20 (provided their earnings are not depressed) means that investor willing to pay a higher premium because they expect the company to grow 20% or more. Hence in order for the company to maintain a PE 20 for the following year they have to have a 20% growth in their earnings.
2. PE/PEG/PB/PS/PCF are all relative valuation. You should compare it with their peers and see how much discount are they to their peers. For instance company A PE is 10x and Company B is 15x. Hence, company A is trading 33% discount [(15-10)/15×100] to company B.
3. Dividend yield is used in comparison. For instance, Company A and B are in the same industry. Both have strong fundamental and it is undervalued. Company A give dividend yield of 2% and company B give dividend 6%. If both company are equally good I will choose company B because it give me a higher dividend yield.
4. Ideally, the best situation is to purchase good companies during the bear. As we mentioned, in the webinar under the portfolio management. During the bull our cash level are much higher. You can still invest in the company but probably invest a small amount.