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The P E Ratio Is So Commonplace and Shorthand That You Shouldn't Focus on It, Right?
The p e ratio is the most shorthand quick snapshot of a value ion of a company that most people adopt. But if you inverse it, you are actually getting a yield that you are expecting from that suwalkus through how that works. So let's say i go out and i want to buy that stock. I pay 20 dollars, i get the stock, and i now have a claim on one dollar in earnings per share. What does my earnings yield on that? Well, the answer is the inverse of 20 or a five % yield on my investment. And everything involved wit investing, absolutely everything, has tons of new ants to it. Let's take a quick break and hear from