Understanding the PE Ratio and Its Implications

This chapter explores the importance and constraints of the PE ratio as a valuation method, especially for high-growth companies. It also highlights the concept of earnings yield and stresses the need for context in financial assessments.

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Episode notes

In today’s episode, Trey Lockerbie chats with Brian Feroldi. Brian Feroldi is a financial educator and a writer for the Motley Fool. Be sure to check out Episode 375 where Brian and Trey discussed how he creates an investing checklist. Brian has written a new book titled Why Does the Stock Market Go Up? It’s a simple breakdown of questions you have likely had along your investing journey.

IN THIS EPISODE, YOU'LL LEARN:

03:21 - How compounding works.
07:01 - What is the S&P500, Dow Jones, and NASDAQ, and how they came to be.
26:44 - Why the stock market typically goes up over time.
37:24 - Valuation metrics like the P/E ratio as well as things like earnings yield and dividend yield.
55:50 - How the 401k originated from an accident.
And a whole lot more!

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members.
Brian Feroldi's YouTube.
Brian Feroldi's Twitter.
Brian Feroldi's Motley Fool Articles.
Why Does The Stock Market Go Up? Book.
Trey Lockerbie's Twitter.

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