Absolute

One point that I could never agree with all those "experts" in financial analysis is we have to compare all performance measures to other companies within the same sector.

For example, if all insurance company are selling at a price-earning (PE) ratio of 25, then, assuming everything else are similar, a PE of 20 is not expensive.

That, I believe, once again, is a self-fulfilling prophecy. If the market is mad with a particular kind of business, the price goes up for each and every company of that sector - exactly because the price of another company next door is also going up, and, therefore, the price does not represent an excessive valuation.

Alas, you know, when a tiny mass is expanding in all direction to the same degree, it becomes a bubble.

There must be a method to evaluate a company irrespective to the type of business.

For the same reason, there must be an absolute standard that we pass our medical students.