Well, Mr. Drake, just forget the PE.
The PE is the judgement people make about a company, which includes its future potential of growing the market of its products, the management, the earning history ( sustainable and consistency) . So , PE is the result of people grading a company, and you should not base on the PE to make your investment decision. I do not think
a penny stock of $10C with earning of $ 0.01 , a PE of 10, is better than Microsoft with a PE of over 60. A company with low PE always has some problem, either bad management, bad earning prospect , or low growth ...etc. A company with low PE
is because investoors do not like to invest in the company, as a result low PE all the time. All in all, it is money which drive the stock market, the more money available to the market , the higher PE it will go for companies with quality. How high is high about PE ? If 90% of the stocks had PE of over 100%, then PE of 60 is really not high at all. If 99% of the stocks had PE of less than 5, then a PE of 10 is high . So ,
how high is high ? and how low is low ? It all depends on how much money we have in the market to drive the stock price. Money need to have some place to go. |
