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6.
The P/E ratio is only useful when a company is fully optimized for profits (stage 4)
It's most deceiving in stages 3 & 5
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4.
In the beginning, focus the vast majority of your effort on boosting your income & savings rate
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406 reads
2.
It's a FAR bigger mistake to sell a mega-winner early than it is to hold a mega-loser too long.
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3.
Compounding pays off the most in the out-years
Optimize for longevity first, everything else second
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1.
Stock prices & business profits are not at all linked in the short-term, but they are 100% linked in the long-term
Watch the business, not the stock
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10 critical investing lessons I wish I could teach my younger self
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I've been investing for 18+ years I've made TONS of mistakes along the way here are 10 critical investing lessons I wish I could teach my younger self:
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What's a good P/E ratio to buy a stock at?
Unfortunately, there's no P/E ratio set in stone that makes a stock a buy if it's below, or a sell if it's above.
Often value investors and growth investors will look for different things in a P/E ratio.
- Value Investors - the lower the P/E ratio the better.
- Growth Inves...
How growth investors can use variations of the P/E ratio
Growth investors often use the P/E ratio as a building block for finding two other metrics: the forward P/E and the PEG ratios.
- The forward P/E is calculated by dividing the stock price by the company's expected future earnings.
- The PEG ratio is calculated by dividing the comp...
P/E Ratio (Price per Earning)
Let's say that a company's stock trades for $100 and that the company has earnings per share (EPS) of $6.50 over the last 12 months.
We can calculate a trailing ("last 12 months") P/E ratio for that stock by simply dividing the stock price ("P") by the EPS ("E"), so 100/6.50 equals about 1...
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