5 Comments

1. 

   nubface1001 on November 7, 2022 at 2:54 am

   Idk wtf i am looking at. Calls or puts my guy 

2. 

   first_jewish_lawyer on November 7, 2022 at 2:54 am

   What’s a PE ratio?

   Price as it compares to Earnings.

   My corner coffee shop earns $200k per year in revenue. You’re a billionaire’s daughter who thinks it is cute and wants to buy it from me. What’s a fair price?

   Well, how profitable is it? Let’s say it makes $50k per year after expenses but before taxes. That’s the EARNINGS of $50k.

   So what do I sell it to you for? The second graph shows the market’s Price to Earnings multiple over 30ish years. As we can see, normal is about 20. On my shop’s $50k of yearly earnings x 20 PE ratio = $1M is what i’ll sell it to you for as a fair price.

   Well…. you’re a billionaire’s daughter. What would be an expensive ask be for my shop? how about 30 price to earnings. I’ll sell it for $50k*30 = $1.5M.

   At the end of 2021, tesla had a PE ratio of 190. That would be like me asking for $9.5M for my $50k/year coffee shop. Hence, Prices DEVOID from reality.

   ​

   While the second graph, standard PE ratio looks pretty normal at 20, we are being deceived by inflation. If my coffee shop made $70k this year in profits, are we really that much stronger of a business? Probably not. The first graph shows things are pretty dang high.

   ​

   ​

   More for those who want more:

   So high PE ratio = bad? Not so fast. People pay high multiples for ‘growth stocks.’ Snap has a PE ratio of 38…. pretty high. BUT, they have an argument to make that their 2050 profits could be 10x what they are now.

   An established company like GM probably isn’t suddenly 10x profits any time soon. That’s why their PE ratio is closer to 5 or 6. In fact, over the life of the market the average is really more like a PE of 12. So…. things are pretty expensive right now.

   ​

   “Be fearful when others are greedy, and greedy when others are fearful,”

3. 

   first_jewish_lawyer on November 7, 2022 at 2:54 am

   first one is shiller

4. 

   Ok-Train4958 on November 7, 2022 at 2:54 am

   So buy or sell?

5. 

   BrilliantAd5743 on November 7, 2022 at 2:54 am

   This is the dumbest thing I’ve ever seen