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
And so you really need to know what you're getting for that price.
With P-E ratios, investors are trying to compare the price of the stock to the earnings that are generated by the underlying company price.
you know, either looking at past earnings or projected earnings going forward.
Now, since there's so many differences between industries and even individual companies, investors aren't usually making buying or selling decisions based just on PE ratios.
But those numbers can still be a starting point for their thinking about whether a stock is attractive or unattractive.
A low P.E.
ratio shows that investors aren't willing to pay quite as much for a company relative to its earnings.
And that might be, you know, the P.E.
ratio might be low in comparison to what they're usually willing to pay for that company or low in comparison to its competitors.
I think many investors would tell you that there always is an attractive price for investors.
almost any reasonably decent company, but that whether that stock is attractive at that point just depends on that relationship between the price and what you're getting for it.
So sometimes PE ratios tend to be low in certain industries because those are industries where you're not necessarily expecting a lot of earnings growth in years to come, or even within a more expensive area of the market like technology, a company might have experienced a sell-off on some bad news
And maybe its P.E.
ratio has gotten cheap enough that it suddenly seems like a good deal.
So the stock market fell really dramatically early in the pandemic when investors were just facing so much uncertainty about how COVID-19 would affect the economy and businesses.
But then as the Federal Reserve cut interest rates and the government approved large amounts of spending, stock prices started to really recover.
And that was well ahead of the time when companies' earnings projections were expected to start turning the corner.
And so that meant that stock prices were going up well before earnings expectations were, which made the stock market look more expensive, you know, according to these PE ratios.
Investors also really rushed into tech stocks and in shares of other fast-growing companies that aren't quite as dependent upon
just how well the economy is doing at the moment.
Showing 81–100 of 146 · page 5 of 8
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