Nuggets of Investing Wisdom

Nuggets of Investing Wisdom

A website for serious investors in common stocks

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price earnings ratio

CAPE’s halo falls with a thud

  • by Rodney Smith
  • Posted on January 23, 2022January 23, 2022
  • Part 5: Asset Management

CAPE is ignorant of interest rates

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The emergence of a new model of capitalism

  • by Rodney Smith
  • Posted on December 26, 2021December 26, 2021
  • Part 6: The Hallmarks of Superb Businesses

The first step for investors is to come to a new understanding of reported earnings and the book value of equity.

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My thoughts about GMO’s ‘GROWTH BUBBLE’

  • by Rodney Smith
  • Posted on October 17, 2021October 19, 2021
  • Part 5: Asset Management

Using trailing twelve months earnings that are impacted by a recession is a mistake

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What to make of declining bond yields

  • by Rodney Smith
  • Posted on July 11, 2021August 21, 2021
  • Part 7: Building and Managing a Portfolio

The investor does not have to be an expert in macro-economic theory.

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Problems with CAPE Part lll

  • by Rodney Smith
  • Posted on May 3, 2020October 24, 2020
  • Part 5: Asset Management

Wrap up on the drawbacks of CAPE. A fair level for price earnings ratios has changed over the years.

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Problems with CAPE – Part ll

  • by Rodney Smith
  • Posted on April 26, 2020December 1, 2020
  • Part 5: Asset Management

Investors are reading CAPE all wrong.

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What is the right price earnings ratio?

  • by Rodney Smith
  • Posted on March 8, 2020January 15, 2021
  • Part 7: Building and Managing a Portfolio

Price earnings ratios are a frail and shifting basis for determining fair value. They do not force investors to think through all the factors that go into a deep assessment of fair value.

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Is the price earnings ratio (P/E) obsolete?

  • by Rodney Smith
  • Posted on November 10, 2019January 15, 2021
  • Part 7: Building and Managing a Portfolio

Price earnings ratios are simply a rule of thumb. They can lead you astray. But what is worse, they are becoming less and less valid with every passing year.

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The under-performance of value stocks explained

  • by Rodney Smith
  • Posted on August 8, 2019January 15, 2021
  • Part 4: Principles of Operation

There is a lot of talk currently about the underperformance of value stocks compared with growth stocks over the last fifteen years. In fact, value investing has performed well against all other styles. This seeming contradiction comes from the fact that value investing and investing in value stocks are not the same thing.

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