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When people are excited , they are looking at the future potential of the company, and when they are depressed , they look at the PE. The sentiment can change from time to time. People are now looking at the PE of Microsoft, but after Feb 17, people will look at MSFT's potential. Just like people looked at Yhoo's potential in the past one year, and now they are looking at its PE. Most of the time low PE stock only means it has no value for investment , and that is what keeps its PE low !!! Because noone wants the stock , so the PE is low. So, for companies in the traditional market , their PE are generally lower. Such as AUTO, Chemical , Metal ...etc .The reason the PE is low is not because the stock are good, but because no one wants to invest in such stocks !!! |
