Karen Langley
speaker
146 appearances
4 recordings
1 series
first heard Jul 2020
last heard Dec 2024
Karen Langley’s voice in public audio — every appearance, attributed to the second.
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Appearances
For example, in 2020, investors put a lot of money into ETFs that were designed to
to magnify or deliver the opposite of their performance of stock indexes, although not as these new ETFs do match that to individual stocks.
So these funds are being pitched as something that is definitely meant
for active traders who are really keeping a close eye on their investments and trying to make bets on a specific thing.
For example, how the market might respond to an earnings report.
They're not something that would be considered a passive investment, which is where folks, for example, want their money to try to match the performance of the S&P 500 or another stock index.
These ETFs definitely aren't intended for an investor who wants to buy and holds
Their portfolios, they're meant for somebody who is really actively managing on a day-to-day basis where they're putting their money and accepting a higher degree of risk because of that.
Thank you.
Just looking at the number of the price in a vacuum, that doesn't really give you enough information to know whether the stock is cheap or expensive.
Just like, you know, you'd expect different prices for like a house compared to a dinner.
The P-E ratio, or price-to-earnings ratio, is a way to get a quick snapshot of how expensive or how cheap a stock is looking, usually compared to its own history or to
companies in a similar industry.
This ratio looks at the earnings that a company either has produced or is expected to produce and then compares that to the stock's price.
Just to give an example, if a company is expected to make a dollar per each of its shares the next year, you might be deciding, is that worth $20 to you for that share or maybe $10 for that?
And of course, when you're buying that share,
you're probably thinking you're having more of an investment than just that next 12 months of earnings.
Now, generally speaking, if a stock has a low P-E ratio compared to history or its peers, that would suggest to an investor that it's relatively cheap and might be a good investment.
Professional investors find this kind of information attractive because a stock is only going to produce a good return for them if they're buying it at a favorable price.
So the idea behind this is that just looking at the number of the price in a vacuum doesn't really give you enough information to know whether the stock is cheap or expensive, just like you'd expect different prices for a house compared to a dinner.
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