as 1YPEG has become probably the prime metric followed here.
While it has certainly attracted attention by being new and there are a flurry of posts from people trying to make sure they have figured out how to compute it … a reasonable response, considering that it isn’t a standard thing one can just look up … I would say that there has also been a significant amount of balance in terms of both that it is only one number and one should pay attention to the rest of the company and in terms of special conditions in which the number itself is suspect.
Myself, I would give it 6-12 months. If we turn into a bunch of slavering idiots pursuing low 1YPEG above all else, then there is reason to think that we have all lost our minds. But, if the newness fades and it becomes simply one more tool for sanity testing potential investments and/or screening, then I don’t think we have much to worry about.
Thus, I question the value of much backtesting. Oh, it might be interesting, but backtesting in general is so vulnerable to bias from the period selected that it is suspect in the best of circumstances. And, if what one is testing is how well 1YPEG would do if it were the only number one paid attention to, then how is that really relevant to a strategy in which one is always paying attention to the company as a whole and 1YPEG is just one more number that one uses for screening and checking?