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Investing concepts explained·9.2
Is a low price‑to‑earnings ratio a reason to buy a stock?
Not on its own. A low price-to-earnings ratio often reflects slowing earnings, while many of the strongest stocks traded at high ratios because their earnings were growing fast. Tramondo looks first at the growth and quality of earnings and sales, and treats valuation as one factor among several.
See also
General information only; not investment advice, an offer or a solicitation.
Investing concepts explained
- 9.1What is market breadth, and why does it matter?
- 9.3Should you buy shares in an IPO on the first day?
- 9.4How should you invest in long-term themes?
- 9.5What does margin debt say about the stock market?
- 9.6Why can long-term bonds be attractive when interest-rate rises end?
- 9.7Do seasonal patterns matter in the stock market?
- 9.8Does "Sell in May and go away" work?
- 9.9Does a strong January point to a good year for stocks?
- 9.10Why does April often behave differently in the stock market?
- 9.11Is September the weakest month for stocks?
- 9.12Does a strong first half mean a good second half for stocks?
- 9.13Does the gold price follow a seasonal pattern?
- 9.14Are rising interest rates bad for the stock market?
- 9.15How do markets behave when central banks pause rate rises?
- 9.16How do bonds perform after the first interest-rate cut?
- 9.17Why do central banks own so many government bonds?
- 9.18How long do bear markets last?
- 9.19What is a bear-market rally?
- 9.20Are record highs a warning sign for the stock market?
- 9.21Why do a few companies drive most of the stock market's return?
- 9.22How much do dividends contribute to stock-market returns?
- 9.23Do US elections move the stock market?
- 9.24Do commodities help diversify a portfolio?
- 9.25Why are central banks buying gold?