Hey Everyone, A few years ago, I came across a wise saying in Peter Lynch’s Book: A low P/E ratio is a valuable tool for stock selection, but it's not the Holy Grail. Let me explain. Investors often use something called the Price-to-Earnings (PE) ratio to decide if a company's stock is worth buying. It shows how much investors are willing to pay for each rupee the company earns.
Sir kya mutual funds apne funds ko apni subsidiary ya parent company mein bhi invest kar sakti hai ??. Agar waisa hai toh companies fir apni share price ko manipulate bhi kar sakt hai kya ??
No, there are restrictions that they have to follow and they cannot invest huge sums in their own parent company. I’m not sure exactly how much they can invest but you can look it up on google.
great article My notes: I will try to connect P/E ratio with PEG ratio in the future while analyzing a business. Also it is important to remember P/E ratio affects differently in different industries i.e agricultural industries would have more P/E as their sales would be high during harvesting season and pharma companies might have less P/E as they invest a lot in R&Ds and could have less sales.
Sir gaanaaa toh batate jaatey
Haha! Abb se yaad rakhunga.
You explain the concepts in a very simple manner. Thank you for sharing such insightful knowledge Parth sir !!
Thank you for your kind words!
You give a very straightforward explanation of the ideas. I appreciate you sharing your wise knowledge, Parth sir.
Sir kya mutual funds apne funds ko apni subsidiary ya parent company mein bhi invest kar sakti hai ??. Agar waisa hai toh companies fir apni share price ko manipulate bhi kar sakt hai kya ??
No, there are restrictions that they have to follow and they cannot invest huge sums in their own parent company. I’m not sure exactly how much they can invest but you can look it up on google.
great article My notes: I will try to connect P/E ratio with PEG ratio in the future while analyzing a business. Also it is important to remember P/E ratio affects differently in different industries i.e agricultural industries would have more P/E as their sales would be high during harvesting season and pharma companies might have less P/E as they invest a lot in R&Ds and could have less sales.
Thank you for your feedback! You're absolutely right about the variations in P/E ratio across different industries based on their unique dynamics.