Thursday, September 2, 2010

how to play with PE ratio?


Market tends to give high PE ratio for growth securities, low PE ratio for lousy business..

So what it means for this?

Yes, it means do not buy the securities in lousy business even in low PE ratio, but invest in good business in low or moderate PE ratio.

Some might ask since everybody know the business is good, so it is hard for us to buy at attractive price, but believe me.. The market is always unreasonable, sometime they will give you a very attractive price even the business is good.

Investment is actually as simple as that.

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