Tag Archives: Price earnings ratio

A low P/E does not mean that the share is cheap

Stocks: For the I-Banker in all of Us



Mr. Chaturvedi is a businessman and also takes keen interest in the stock markets. He has a varied portfolio of stocks which he tracks in his free time. He gets most of the investment tips by reading financial newspapers and through business news TV channels. Last week, there was a sudden dip in the stock index owing to which shares of a few known companies were available at a lower market price. One of the industry experts on one of the TV channels recommended a few shares for investment as they had a low P/E and were trading at a discount due to the market correction. Satisfied with the explanation and glad to have been able to time the market effectively, Mr. Chaturvedi promptly invested in the recommended shares.

Was he right in doing this or should he have done more research? Let us analyse this.

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