response 1 of 16:

Feb 11 07:35 UTC 1995

I am a bit perplexed by your question, because I don't want to bore you
with stuff you already know. At 15 the P/E ratio says that the market
is currently valuing the company (IBM) at 15 times its earnings.
Price*NumShares=Market Capitalization (what the Market is valuing the co at)
MarketCap/Total Earnings - P/E ratio

OK so the P/E is an indicator of whether the stock is pricey.
If P/E were higher, the Stock would be more expensive, valued against earnings.

Of course the flaw is that earnings is just one way to value a company. 
It is an indicator, but only that. 

Other indicators are often used...book value, sales, they all have their
flaws.

response 3 of 16:

Feb 20 07:05 UTC 1995

When a company loses money, the P/E ration would indeed be negative,
but it is usually quoted as N/A. You may have seen this.

The P/E ratio is not a price, it is a dimensionless ratio, so you cannot
compare it to price to see which is larger. You can think of P/E as 
either (Price of 1 share) divided by (earnings per share) or as the
equivalent ration (Market Cap) divided by (total earnings).

Remember that Market Cap is just price of a share times number of shares.

If P/e ratio were below 1, then you would have the situation that 
the company was valued by the market at less than its current earnings.
You will rarely see this, and when you do you might want to look into the
reason why. Perhaps you are looking at trailing earnings and the company
has been hit with a lawsuit that will force liquidation.

response 5 of 16:

May 26 23:03 UTC 1996

 That's a risky strategy, patches.  Unless you've gota couple of million
dollars to invest, trading on technical aspects (moving averages, trend lines
etc.) is inherently riskier than smart investment based on fundamentals (i.e.
P/E raion, dividend yield, earnings &revenue growth, etc.)  Warren Buffet
did not make his gargantuan fortune by watching every uptick and downtick;
he did it by investing in fundamentally sound, and more importantly growing,
companies for the long-term.
 I've been actively investing for four years now, with some success (avg.
annual return: 25-30%) I've done it by INVESTING (as opposed to trading)
in companies with low P/E's (around 10-15), good management, and future 
potential.  The key to successful investing is taking time to learn what's
going on to whom, and why is it happening.  Be prepared to spend a couple 
of months of research i.e. watching the news, reading the paper, talking
to people, not spending 8 hours a day looking at Value Line)  Remember -
it's hard to lose money in long-term investing

response 7 of 16:

May 28 04:29 UTC 1996

 How many TRADERS do you know of that have made it big?  George Soros, 
maybe, and he's not even a household name.  In the "Investor" list, you've
got Buffet, Peter Lynch, and just about every successful long-term money 
manager.  Often times it may be smart to bet against the crowd, but not here.

response 9 of 16:

May 30 01:11 UTC 1996

        i appreciate your doubts as to trading versus investing, but i can
        assure you that the boys that your buying your stocks from are
        traders.  if they were investors  they would have folded long ago.
        dennis, you mentioned the fact that they hardly loose, <investors> and
that is
        partially true, but the other side of the coin is that they seldom make
it big.  how many years do you want to wait to begin to show a profit??

as for myself, i read nothing, watch no stockmarket programs and try not
to isten to any propraganda that might influence the reading of a chart.
it is very important to be objective to make money.  also when you fall
in love with a stock, that is the absolute end as far as making money is 
concerned.

yesterday i bought prx for 7 1/8 plus 12.50 commission. i bot 5000 shares
but would make the same percentages of profit if i had just bot 1000 shares.
i am looking for this stock to go to 14 or more sometime in the future. 
that would nearly double my money if i waited. however, rather than the
7.00 i hope to make  i will probably make 15.00 plus for a few minutes
additional
work 5 days a week.  that will net me somewhere in the neighborhood of
75,000.00 in the next ? months.  not bad for a 35,00.00 investment.  as
for the fundamentals, they have changed several times over the past 20 years
but the price has always told you when too buy and sell.  btw, did this
same thing with many other stocks.  this kind if action is only available
thru charts.  insider trading excepted heheheh.

so far this year weve had 2 winners.  dna bot at 29.25 and sold at 104.75.
mu bot at 36 and out at 90.  normally i have 1 stock a year that has a good
run
the rest just double in value.  pretty hard for fundamentals to tell you when
this is going to happen:).

forget the big money.  this is kinda like playing the slots.  if you stay long
enough the big money will come.  in the meantime you can take 6 months
vacations andeat steak and drive a new car every so often and in my case hang
out at the beach and the gym as much as you want.:)

good investing guys..........patches.

response 11 of 16:

Jun 1 02:03 UTC 1996

This item has been linked from finance 14 to Intro 47.
Type "join finance" at the Ok: prompt for discussion
of money matters.

response 13 of 16:

Jun 3 04:22 UTC 1996

Re 12:  "Flat market" as you very well know, refers to the average of all
stocks traded on the NYSE, NASDAQ, etc.  However, one can always find stocks
that are moving up ina flat, or even bear, market.  And then, of course,
thereare always some "bargain buys" after a good market shakedown.

LSI is a pretty good company, and I also think that they could use a split.

As for the kids, let them eat bread and water during the dry spells.  Like
my dad always said, it builds character.

response 15 of 16:

Dec 22 03:32 UTC 1996

Um, it hasn't been that bumpy, percentage-wise.