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Article states P/E is calculated by "...dividing earnings per share by the stock price". That would be E/P. P/E is dividing stock price by earnings per share. How can something so basic be published incorrectly....does no one proof read this stuff?
$17.1 Trillion and $3.6 Trillion matter a bit also! ;)
I am a CFP and I will tell you all you need to know about investing right here. Keep in mind this is free advice so you get what you pay for.
1. Ratios might be important to a mutual fund manager, but are worthless to your average investor.
2. Avoid stocks (unless you are a gambler) and invest only in mutual funds.
3. Virtually all stock brokers and financial planners are crooks (unless charging an hourly fee for advice - good luck finding one, there is no money in it compared to commissions). All they want is to get in your pocket via commissions - PARTICULALRY ONES THAT SELL INSURANCE PRODUCTS - annuities, whole life, etc.
(IMPORTANT INSIDER NOTE - THESE IS AN INVERSE CORRELATION BETWEEN COMMISSIONS ON INVESTMENT PRODUCTS AND WHAT IS TRUELY IN YOUR BEST INTEREST. WRITE YOUR CONGRESSMAN. I AM GENERALLY AGAINST TOO MUCH REGULATION, BUT THIS IS ONE THING THE GOVT COULD ACTUALLY DO TO HELP PEOPLE. THE MOST SUCCESSFUL BROKERS ARE CROOKS FOR EXACTLY THIS REASON. THE MORE YOU SCREW YOUR CLIENT, THE MORE YOU MAKE $$$...PERIOD!)
4. Buy mutual funds that are appropriate for your age and risk tolerance. Realize that you are still taking a risk, but no risk, no reward long term.
5. Saving money every pay period, whether invested or not, is just as important as anything. Don't live check to check, unless one of those "expenses" is saving.
6. If you do decide some stocks are appropriate for you, keep it to a minimum and NEVER buy something because someone on the TV or the internet or someone at the coffee shop said so. By the time you are hear the recommendation, it is too late. Resources such as Morningstar and Value Line are helpful, but select a stock you feel good about. If it fails, you have no one to blame but yourself.
7. Timing of the market (significantly increasing or decreasing your stock vs. bond vs. cash MUTUAL FUND allocation) is not a weekly or monthly thing. It is only based on MACRO events such as major market or life events. Market crashed like 2009? Go all in baby! Don't be stupid and go to cash. Market is high (granted low/high is subjective and not that easy to judge)? maybe back off to more conservative investments, going back in WHEN (not IF) the market crashes again. Ditto for life events, retiring sooner or working longer than expected. Health reasons, windfalls, unexpected events, etc..
8. Be patient!
GOOD LUCK! And don't waste your time reading articles like this or listening to ding bats on the stock market channel. Get a grip, get educated, and leave emotion out of it. Be a Mr. Spock and your will "live long and prosper."
1) Two bad examples are given for ( LONG TERM) Debt to Equity Ratio. In general, the number should be less than 1/3 (33%). If it's higher, a study of the long-term trend in the ratio must be studied to determine if the company traditionally holds that much debt and has been able to handle it over that long term. If the debt is a new issue, check to see if an acquisition accounts for it.
2) Ben Graham's formula is not presented correctly here.
Ben Graham's original formula, as presented here, is V = E x (8.5 + 2G) where V is value, E is earnings per share and G is the growth rate of eps in percent. This was based on bond rates in 1962.
He modified it in 1974 to be V = E x (8.5 + 2G) x 4.4%/A where A is the current AAA corporate bond rate and 4.4 was the rate in 1962.
Since 10-yr AAA corporate bonds are yielding 3.5% now, that indicates the V of stocks should be 26% more than "normal." Applying that to the P/E of the S&P 500, the market isn't very pricey now.
He did achieve 9 thumbs down in a row from me for his nine, nine, nine posts. LMAO
Now, how about 9 truthful posts in a row about how your brand of Christian Capitalism works? You know, about enriching yourself by any means necessary. Lying, cheating, stealing, manipulating, bribing, extorting, outsourcing, special favors/nepotism, slave wages and even some good old murder when all else fails. Thanks for that exceptional explanation of Christian Capitalism at it's finest. THANKS, BUT NO THANKS!
IN GOD I TRUST!
IN MONEY YOU TRUST!
Go peddle your lies to your base old geezer. It won't work with mainstream America!
P.S. In your upcoming posts, could you tell us more about Ayn Rand, John Galt, John Birch, Gordon Gecko and the Koch brothers. Inquiring minds want to know................... THE TRUTH!
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[BRIEFING.COM] The major averages have not gone anywhere during the past 30 minutes, but there has been some movement in the semiconductor space. Specifically, Infineon Technologies (IFNNY 11.19, -0.37) has agreed to acquire International Rectifier (IRF 39.19, +12.63) for $40/share. Infineon Technologies is lower by 3.2%, while International Rectifier has spiked 47.5%.
The broader PHLX Semiconductor Index is higher by 0.7%, while the technology sector sits right below its ... More
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