Iron ore price, page-3077

cheers fozza

Whilst PE is obviously one of the most prevalent metrics to value how cheap or expensive a stock is, obviously its not the be all end all in my view, there are 100s of other parameters to consider.

Clearly stocks with ridiculous PEs have investors thinking that future growth is going to be very strong, the problem is when the company comes out with announcements that is ever so slightly deviated from that mindset of its investors the stock gets slaughtered. Dominos is a perfect example of that. You had investors climbing over each to jump off the cliff to drive it to like 85 bucks, then the moment its future growth didn’t meet the PE investors again climbed over each other to jump off the same cliff to get out, then everyone comes out after the fact saying ohhhh it was a no brainer, did you see the PE before the blood bath. I think it’s more than that, ill summarise by saying this, it’s just a damn pizza shop for god sake, I mean how many damn 5.95 pizzas does a franchise need to sell above what they are doing to see sustained growth.

Furthermore PEs can also be skewed via very clever accounting practices, so a PE is not always painting the correct picture of the company’s status.

Like I mentioned before im far from an expert in quantitative analysis, so even though personally I am mindful of them in my share market investing I certainly don’t focus a great deal on PE, its always there in the background for me and when I look at a stock and it has high PE combined with all the experts and analyst’s agreeing PE is at silly levels, then its probably a bit of a red flag and time to be very weary of a potentially large pull back.

Like I said im no expert in this field And being a qualitative investor im probably not the best person to ask, im a firm believer in leaving all the quantitative analysis to the guys that sit at desks living and breading this stuff 24/7. I just come in and read their conclusions or listen to their views on the business channel, then I place say 20 conclusions on the virtual bell curve in my head being mindful of the standard deviation of expert’s analysis and then I go from there.