P/E Ratio is seen as a mantra by way too many fininfluencers which doesn't allow them to take into proper account a better holistic view on the company business.
I think everything starts from the misunderstanding of the concept of "Value Investing".
Hence, I find marvelous your idea to refer to this science as, rather, "Business Investing".
Great thoughts. We are living in a world with more rapid currency debasement, therefore, average P/E ratios will be higher in the future than we've been accustomed to in the past.
No single metric is sufficient. A high p/e ratio is a warning that the company is expensive on a valuation basis. That doesn't mean it's a bad investment, but there better be a very good reason. A high p/e ratio also means more downside risk, if you are wrong.
How about following institutional investors? My problem with P/E and P/B ratios is that they’re not telling you whether a stock will resume an uptrend. The could just keep falling irrespective of the ratios. Genuine question.
Fabulous article, food for thoughts.
P/E Ratio is seen as a mantra by way too many fininfluencers which doesn't allow them to take into proper account a better holistic view on the company business.
I think everything starts from the misunderstanding of the concept of "Value Investing".
Hence, I find marvelous your idea to refer to this science as, rather, "Business Investing".
Taking some notes
Love this article. Any new stock picker should read this piece. Thanks for having made it public!
Great thoughts. We are living in a world with more rapid currency debasement, therefore, average P/E ratios will be higher in the future than we've been accustomed to in the past.
No single metric is sufficient. A high p/e ratio is a warning that the company is expensive on a valuation basis. That doesn't mean it's a bad investment, but there better be a very good reason. A high p/e ratio also means more downside risk, if you are wrong.
How about following institutional investors? My problem with P/E and P/B ratios is that they’re not telling you whether a stock will resume an uptrend. The could just keep falling irrespective of the ratios. Genuine question.