Using PE as a Guide

http://samltt88.blogspot.com/2008/12/v-thats-y-d-chinese-said-d-length-of.html

Sam, I am a silent reader of seng's blog & also your blog , I found that they are confuse with which PE to use for shares picking, mind to teach us which one to be used?

thanks in advance

Read the below:

random: and which PE should we use bb? TTM PE? Last year's PE? Forward PE? 10 Dec 07, 10:46

sasuka: andy.. I doubt syndicate will play the market... so just look at good timing 2 enter... 10 Dec 07, 10:46

random: even the PE stated on my HLE screen is sometimes wrong.. 10 Dec 07, 10:45

bullbear: For example, the simple PE. PE of KNM is quoted at around 27 in the Star, in the Financial edge it is 47. The price is the same, so the calculation of PE was definitely based on different EPS used by these 2 sites. This can be confusing for the average investors.

***First of all, who is seng ? Which blog u r referring to?

From d above posting, I can see some of them don’t 100% understand what is PE?

That's y Chinese said: - d length of our fingers r not d same, means: - why some one can be Doctor, lawyer, successful investor n bizman...N why some cant???

Why some can be rich n some r so poor?

Why same effort n guidance given by u but not all of them can be graduate?

As known to u , everyone know who is Warren Buffet N Benjamin Graham, n most of them read their investment skill n method also, why some can be so successful n some r so broke ?

Bcos:-D Length of our fingers r not d same! Some r smart some r not!

U know d formula of PE doesn’t mean u know what is PE!

U know what is PE doesn’t mean u understand what is PE!

U understand what is PE doesn’t mean u know how to apply it on share investment!

Why should u follow d press n broking hse’s PE when they r not d same? (this show they r either don’t understand or may be don’t know how to calculate PE )

Do it yrself by calculate its PE based on its earning lah ! what so difficult ?

Why there r differences of PE ? simple ! Some broking hse calculate based on last year earning, some calculate based on 1 or 2 or 3 qtrs earning !

of course they r different lah !

So which one to use ?

Last year PE take it as a guide, use current earning to estimate its PE for d coming year !

Example :

Last year PE giving u 8

If I see its Qtr earning improving ( minus out d one off earning if there any ) n its future earning looks bright ( Steel sector n oil sector ) , I am quite sure d PE for d coming year will definitely better or lower than last year ^V^

Masteel at 1.51

Based on last year earning of 22.47

PE = 1.51/22.47 = 6.7

Based current earning (3 Qtrs only )= 23.32 cts

PE = 1.51/23.32 = 6.4

BUT dont forget, PE 6.4 is based on 3 QTRS only !!

there is one more to come , therefore , we can expect lower n better PE for Masteel in year ended 2007 !

What is so difficult to get its PE yrself ?D

Do u know how to define mkt crash like 1997 n 1998 ? Mkt crash is when u can buy d below blue chips at PE < 10 :-

PBB , PPB, Maybank, IOIcorp, YTL, Genting , Digi ,SD , IJM , KNM ,Resorts.....

Once u can get d above blue chips at below PE 10, then u will understand better what actually PE is !?

Is low PE guaranteed u sure gain ? refer to my previous posting at :-

http://samgang.blogspot.com/2007/12/v-portfolio-as-at-30-nov-07-v.html


Posted by Samgoss at 7:54 PM


Comment:

Copied an old posting from the above blog to illustrate how PE is being used by this blogger. It is good of Samgoss to share this.

PE is only one of many market metrics one look at as a guide to investing in shares.

Also read:
Market metrics P/E and Intrinsic value