P/E Ratio: Hidden Meaning
And, therefore, when a company has P/E of 50 plus, then what does it tell us? Have you ever thought, what will be your age, after 50-plus years, when you would get the real value of your investments? Well I can guess many have not while purchasing such shares, as they are mostly guided by the Tip-providers or by the FREE advises (they get in electronic and print media).
However, a high PE Ratio, sometimes does indicate that majority of the investors expect very high growth in a company’s earnings in the future. Or market feels that some sectors could show stupendous growth trajectory in future.
But, many a times this chart of "Over-optimism'" goes upside down as it happened in case of Suzlon Energy Ltd, once the "Blue-eyed-boy" in the 'Green Energy Space". And then what happened? Yes, the story of Humpty Dumpty was re-visited.
But, many a times this chart of "Over-optimism'" goes upside down as it happened in case of Suzlon Energy Ltd, once the "Blue-eyed-boy" in the 'Green Energy Space". And then what happened? Yes, the story of Humpty Dumpty was re-visited.
Who were pioneers in this kind misleading campaigns--mostly the TV--analysts or SEBI-registered marketmen.
Now also, the same thing has started. Therefore, think twice before jumping your guns on the high P/E companies.
Now also, the same thing has started. Therefore, think twice before jumping your guns on the high P/E companies.
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