Anticipate The Worst And Practise A Possible Response

[JapaneseDog]

P/E = Market price of the company / Annualized Earnings of the company

Interpretation (lay man term):
Treat earnings as one item, say an apple. So, E = Apple
Company's P/E = 5 times (the company is selling one apple for RM 5) [expensive? we don't until we compare with other]
Industry's P/E = 8 times (the industry is selling one apple for RM 8 ) [now we know that company's apple is cheap]
Buy the apple from that company. Cause the price of that apple will increase to RM8 one day...(don't know when)

Interpretation (technically):
company's P/E = 5 times (the market is willing to pay RM5 in order to earn RM 1 )
Industry's P/E = 8 times (the market is willing to pay RM8 in order to earn RM 1 )
Company is undervalued.

However, every measurements have its own shortfall/disadvantages:
1. P/E would be meaningless if earnings is negative.(common for growth company)
2. Industry's P/E may be a wrong benchmark, why? From the example illustrated above, the industry's apple may be too expensive, making the company's is properly valued the industry's is overvalued.



Think and you shall grow rich,
JapaneseDog

[theng]

can tell me which company u using "the picture" ?
because i just can find par value from OSK, can't find NTA in OSK.

Rhb web site go to www.rhbinvest.com

Maxforce, u r right sometime not all under value stock can get good return but don’t u think that this is safe for a newbie
to get a good counters than taking a risk ? one’s have to take time to learn in stock trading but before he is good, he have
 to safe guide himself from paper lost.

 Japanesedog I agree to what u said

[Francis]

Thanks JapaneseDog and theng,  good explanation on the P/E =D> . I got it.

I will do research on it.

[Maxforce]

Er, no loh theng. I think u have just dug a hole for him :p
haha no lah joking bro.
understand your concerns and etc.
But if the newbie goes and buy just based on one two indicators, then disaster strikes.
I was a newbie once. I did that PE and NTA stuff.
I also did the hype hype stuff.
I think all fellas oso did la. So what am I saying?
Hmm? Weird... I had a point to illustrate earlier. Just lost it.
Anyway think need to tell der fella of more indicators - e.g. NTA and PE good but share got no volume wan then probably need to keep for 10 years before share price naik.
erm, cycle of the stock market. which season will go up, which season goes down? stuff like that...

[Maxforce]

OKOK PE PE PE
Lets take the Poultry industry

CAB Cakaran and Leong Hup Industries, lets leave out Farmbest as homework :p
CAB Cakaran has been trading at the range of PE 8-10 this year
LHH has been trading at the range of PE 12-16 this year
Does this means that LHH is too expensive must sell sell?
And for CAB is cheap cheap must buy buy?
To me, it does not say a thing cos of my period of holding is 3-6 mths maximum. Yes, over the long run their PE should theoritically be more or less the same. But lets highlight the wording LONG RUN. So how long ar wanna keep the shares? (Gigi tinggal dua aje loh that time!)
Anyway, you'd say, if Max is right, then why bother looking at PE? Doesnt PE symbolize cheap/expensive?
No loh. I am both right and wrong oso loh. Just that the theory does not work in my trading style.

So why PE of LHH more than CAB?
Well back to the basic - share price is based on future. So if ppl think the future of LHH is brighter than CAB, they re more willing to pay more.
Of coz, there are more reasons like CAB is currently being played by locals but with their idiot director selling one big chunk of shares after bonus issue while LHH is being accumulated by PB Aneas - foreign investment house

Oh since we're at NTA, NTA of LHH is also higher than its share price.

On subject of am I holding LHH shares? Traded in them, buying and selling over their periods of consolidation - normally contra selling. Now, taking a rest, playing World Cup.

[Francis]

But if the newbie goes and buy just based on one two indicators, then disaster strikes.

don't worry ... i know MA, RSI, DI+-... only  
i will add the NTA and PE into my trading style.

Anyway think need to tell der fella of more indicators - e.g. NTA and PE good but share got no volume wan then probably need to keep for 10 years before share price naik.

yup, from book i know the volume is important.

erm, cycle of the stock market. which season will go up, which season goes down? stuff like that...

 :-k   stock market which season go up/down ?

[Maxforce]

You know, like daily-weekly cycle, monthly cycle, presidential cycle, economic cycle.
From shorter term to longer term.

[trading888]

P/E = Market price of the company / Annualized Earnings of the company

Interpretation (lay man term):
Treat earnings as one item, say an apple. So, E = Apple
Company's P/E = 5 times (the company is selling one apple for RM 5) [expensive? we don't until we compare with other]
Industry's P/E = 8 times (the industry is selling one apple for RM 8 ) [now we know that company's apple is cheap]
Buy the apple from that company. Cause the price of that apple will increase to RM8 one day...(don't know when)

Interpretation (technically):
company's P/E = 5 times (the market is willing to pay RM5 in order to earn RM 1 )
Industry's P/E = 8 times (the market is willing to pay RM8 in order to earn RM 1 )
Company is undervalued.

However, every measurements have its own shortfall/disadvantages:
1. P/E would be meaningless if earnings is negative.(common for growth company)
2. Industry's P/E may be a wrong benchmark, why? From the example illustrated above, the industry's apple may be too expensive, making the company's is properly valued the industry's is overvalued.



Think and you shall grow rich,
JapaneseDog

wah, japan dog so smart and seem like so pro in stock market...

hi nice to meet u japan dog, can i learn more on stock market from u?

i really admire u interpretation skill...