The Investing for Beginners Podcast - Your Path to Financial Freedom cover image

Brian Feroldi Joins Us to Give Us 8 Reasons the P/E Ratio Sucks

The Investing for Beginners Podcast - Your Path to Financial Freedom

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The Importance of Cyclical Demand

Gavin Whitehead: Some industry sell goods and services that are just naturally prone to booms and busts. The profits, the profitability of companies that have cyclical demand because of some commodity price aren't very predictable. So if you're investing in a company that has maybe they're a gold maker or it's an industrial company that does very well when the economy is running hot but demand evaporates when the company is going strong,. For those companies, the PE ratio will literally always tell you the wrong thing.

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