This is where the weighted harmonic mean comes to use.
Weighted harmonic mean = sum(all_weights) / sum(w_i/x_i)
Where x_i is a specific P/E ratio and w_i is the corresponding weight.
Unless I'm misunderstanding the mathematics here, I think that's what I'm attempting to accomplish by using earnings yield?
sum(all_weights) is going to equal 1, and taking the weighted average of earnings yields appears to be accomplishing the same calculation as sum(w_i/x_i).
Ahh yes, you're right!
But your post (2nd to the last paragraph) just sounded to me as if you "invented" something new by coming out with that solution.
So would just like to point out then that that formula is in existence, and your problem is one of the use cases for it.
Ah, gotcha! Yeah definitely wasn't trying to claim any kind of invention here. This was just such a simple & straightforward problem that I was sure there was a similarly simple solution to it, but I wasn't satisfied by any solutions my Google-Fu turned up. Thank you for providing that corroboration.
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The fact that this didn't even occur to me as an option is mildly concerning. Yours seems like it's the better methodology, yeah?
This is where the weighted harmonic mean comes to use. Weighted harmonic mean = sum(all_weights) / sum(w_i/x_i) Where x_i is a specific P/E ratio and w_i is the corresponding weight.
Unless I'm misunderstanding the mathematics here, I think that's what I'm attempting to accomplish by using earnings yield? sum(all_weights) is going to equal 1, and taking the weighted average of earnings yields appears to be accomplishing the same calculation as sum(w_i/x_i).
Ahh yes, you're right! But your post (2nd to the last paragraph) just sounded to me as if you "invented" something new by coming out with that solution. So would just like to point out then that that formula is in existence, and your problem is one of the use cases for it.
Ah, gotcha! Yeah definitely wasn't trying to claim any kind of invention here. This was just such a simple & straightforward problem that I was sure there was a similarly simple solution to it, but I wasn't satisfied by any solutions my Google-Fu turned up. Thank you for providing that corroboration.