The maxim used to be that a stock should sell, other things being equal, for about ten times earnings. The maxim now says "15 times earnings." This is known as Raskob's Rule, because one day in March 1928, John Jacob Raskob, then finance director of General Motors, walked up a gangplank on his way to Europe and remarked that 15-times was a proper modern ratio—that General Motors ought to have been selling at that time at 225.*
Since Raskob's Rule came from a motor-maker, quidnuncs laughingly pointed to automobile stocks as they studied...
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