Defect Ratio

Given the difficulty of quantifying the probability of loss, investors who want some objective measure of risk- adjusted return— and they are many— can only look to the so- called Sharpe ratio. This is the ratio of a portfolio’s excess return (its return above the “riskless rate,” or the rate on ...

Get out:

• when a stock moves up 100% in 2 weeks or less
• when you are up 300% from your entry price
• when all of your friends and CNBC begin to talk a lot about it
• when the stock closes below its 50day or 200day moving average
• when the stock has a daily clo...

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...