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I am sorry but you really should watch the free lectures. I spend a lot of time discussing the PE ratio, and I cannot type it all out here.
A higher PE ratio signifies that shareholders are expecting higher future growth.
Good day sir
would like to clarify sth
Sir you gave an example in your lecture regarding amazon. You said that the investors weren’t expecting that it’lit’ll take 3000yrs to get their money back.
my doubt is I guess quiet silly but do you mean that even though the p/e ratio quoted in d newspaper was 3000,they still went ahead and invested ecpecting the earning to rise?
and if the earnings did rise as much as the investors had ecpected,will the p/e ratio then fall?The market price is always based on their expectations for the future.
If they start expecting things will be better than they were expecting before, then the price (and therefore the PE) will increase; if they start expecting things will be worse than they expected before, then the price (and therefore the PE) will fall.
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