Why The PE Ratio Fails Investors & (How to Avoid the Traps!)

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In this video I explain how the PE Ratio fails investors. The Price to Earnings Ratio is a simple formula used to compared the earnings produced by a stock to the price investors can pay for it, and with simple theoretical
examples it makes perfect sense.

However in the real world the earnings and price of a stock fluctuate over time, so there is no reason for using a trailing twelve month earnings ratio to predict whether a stock is cheap or expensive.

In this video I explain how we can calculate the average business cycle earnings for a company, its average cycle growth rate, and therefore come to a more accurate picture of how much cash we are likely to get out of the company over the next 10 years.

Sven’s Thor Video: https://www.youtube.com/watch?v=Tv3wYtx5HBU&t=1s

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Disclaimer:
The information in this video is general information only and should not be taken as constituting professional advice from Hamish Hodder.
Hamish Hodder is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances.
Hamish Hodder is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this video.

Видео Why The PE Ratio Fails Investors & (How to Avoid the Traps!) канала Hamish Hodder