Friday, September 21, 2018

Price to Earnings ratio is the most widely used tool to gauge the attractiveness of a stock. But it is important to know the limitation of PE ratio so we don’t fall for the “everything looks like a nail to a man with a hammer” illusion. Here are a few things to understand.

Confuse between “most low P/E stocks are cheap” and “most cheap stocks have low P/E”

A classic misconception is we assume low PE stocks are generally cheap. Just as “most rich people are Asians” is not the same...

What's Wrong with P/E Ratio?

from Aussie Stock Forums https://ift.tt/2OGdvDd

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