Relative Valuation Model

KO trades at 20x trailing earnings. DIS trades at 19x trailing earnings. GE trades at 12x trailing earnings. GOOG trades at 22x trailing earnings. Each company has completely different growth rates, earnings drivers, profit margins, risks, and...issues. So they are all evaluated by different elements, but they are also evaluated relative to each other, and to the "market," which most people define as the S&P 500, best tracked by ticker: SPY.

So if the "market" is at 19x earnings, then GOOG trades at a 3x relative multiple premium to it, and GE trades at a 7x discount to it...all of these valuations, usually for good reason. Until something changes. And it always does.