90% of retail investors' myths about PE Ratio PE Ratio as a valuation indicator should not be used too rigidly by investors. Otherwise, you will not know how to workaround. The following will explain many newbies’ myths or “superstitions” to PE ratio: 1) Many masters have said that stocks below PE 10 are cheap, and this is not wrong, but there are many blind spots. If you only buy after watching PE 10 or less, you will lose a lot of investment opportunities, Because PE 10 is just a guideline, Rather than a religious doctrine or legal rule that you need to stick to. The conclusion is that there is no certain number for the PE Ratio. 2) Taking PE Ratio as a whole is actually not a good strategy Because it will ignore PE is actually an equation, composed of Price per share (share price) and Earning per share (profit). The summary is to think and analyze the PE Ratio separately. The following will explain how to do it. How to use PE Ratio to the fullest? 1. Measure market sentiment by ...
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