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Why the P/E Ratio Might Be Useless.. and What can Replace it?
By K.I.S.S. Investing  •  March 19, 2012
Countless investors -- individuals and professionals alike -- spend their time seeking out cheap stocks with very low P/E ratios. Sometimes the stocks are cheap are a reason, they are not in favourable industries or have poor fundamentals hidden within. And as a result, the stock prices stay stagnant... sometimes for years! (That is what happened to me once!).

In addition, this creates the notion that stocks with high P/E ratios should be written off as expensive (meaning opportunities often lie hidden in this group).

The problem, though, is that a company with a high P/E ratio may not actually be expensive. A company with a P/E ratio of 50 -- or higher -- may be cheap. Which means...


For some companies, the P/E ratio is meaningless.
It's a bold statement, but stick with me.

You see, the problem with the P/E ratio is that it's a retroactive metric. ...
...
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By K.I.S.S. Investing
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