1. How changes in the price-to-earnings ratio affect annual returns. *** Common sense with funds: The price-to-earnings ratio (P/E) of a stock refers to the market price per share divided by earnings per share (EPS). It is usually used as an indicator of whether a stock is cheap or expensive.
(Inflation can inflate earnings per share, distorting the comparative value of the P/E ratio).
The P/E ratio links a company's stock price to its ability to create wealth.
Earnings per share is generally calculated by dividing the company's net profit over the past year by the total number of shares sold.
The lower the P/E ratio, it means that investors can buy stocks at a relatively low price.
Assume that the market price of a certain stock is 24 yuan, and the earnings per share in the past year was 3 yuan, then the price-to-earnings ratio is 24/3=8.
The stock is considered to have a price-to-earnings ratio of 8 times. That is, assuming that the company's annual net profit will be the same as last year, the payback period will be 8 years, which translates into an average annual return of 12.5% ??(1/8). Investors
For every 8 yuan you pay, you can share 1 yuan in corporate profits.
Investors calculate the P/E ratio primarily to compare the value of different stocks.
Theoretically, the lower the P/E ratio of a stock, the smaller the investment risk of the stock and the more worthy of investment.
Comparing P/E ratios across industries, countries, and time periods is unreliable.
It is more practical to compare the price-to-earnings ratios of similar stocks.
The P/E ratio widely discussed in the market usually refers to the static P/E ratio, which is the ratio of the current market price divided by the most recent known earnings per share.
However, as we all know, the income disclosure of listed companies in my country is still semi-annual, and annual reports are mainly published 2 to 3 months after the end of the disclosed operating period.
This brings many blind spots and misunderstandings to investors’ decision-making.
Generally speaking, the P/E ratio indicates how many years the company needs to accumulate profits to reach the current market price level. Therefore, the lower the P/E ratio index value, the better. The smaller the value, the shorter the investment payback period, the smaller the risk, and the generally higher investment value.
High; a large multiple means a long recovery period and high risks.
The calculation formula of the dynamic price-to-earnings ratio is based on the static price-to-earnings ratio and multiplied by the dynamic coefficient. The coefficient is 1/(1+i)^n, where i is the growth ratio of the company's earnings per share, and n is the company's sustainable development.
Duration.
For example, the current stock price of a listed company is 20 yuan, the earnings per share is 0.38 yuan, the earnings per share in the same period last year was 0.28 yuan, and the growth rate is 35%, that is, i=35%. The company can maintain this growth rate in the future.
5 years, that is, n=5, the dynamic coefficient is 1/(1+35%)^5=22%.
Correspondingly, the dynamic P/E ratio is 11.6 times?
That is: 52 (static price-to-earnings ratio: 20 yuan/0.38 yuan = 52) * 22%?
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Comparing the two, the difference is huge. I believe ordinary investors will be surprised and suddenly realize it.
The dynamic price-to-earnings ratio theory tells us a simple yet profound truth, that is, when investing in the stock market, you must choose companies with sustainable growth.
Therefore, it is not difficult for us to understand why asset restructuring has become an eternal theme in the market, and why some companies with poor performance have become dark horses in the market with the support of substantive restructuring themes.
When comparing with the current period's price-earnings ratio, this formula is also useful: Dynamic price-earnings ratio = stock price / (net profit per share in current year's interim report * net profit in last year's annual report / net profit in last year's interim report) UBM Technology's annual report is 0.0018 yuan, so its price-to-earnings ratio is
More than 400 times, the dynamic price-to-earnings ratio will be calculated to thousands of times due to its poor growth.
Now that we are losing money in the first quarter, of course both price-to-earnings ratios will be displayed as negative numbers.
2. Please recommend a few books about getting started with funds and fixed investment in funds. "Interpreting Funds: My Investment Views and Practices" (Ji Kaifan). This book basically introduces the basic knowledge of funds. It is the best reading book for beginners to masters. Although
This book took a long time to publish, but its ideas are still consistent with modern investment concepts.
2. "Common Knowledge of Mutual Funds" (John Bogle) This book is very thick. I was shocked when I bought it. There are too many words, but you get what you pay for, and every word is precious.
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It introduces the history of fund development, the changes in the world economic structure, and also explains the basic principles and precautions for fund investment. However, we need to pay attention to one thing. The growth of mutual funds in the United States was two years earlier than that in China. It is not a successful experience.
The national conditions and market environments of the two countries are different, so we must learn to think dialectically, as not all good methods are applicable to each other. 3. "Puppy Money" This book is very suitable for people who earn money, work people, and those who save money.
People who don't have money should read it carefully. It teaches us how to accumulate our own wealth and how to achieve financial freedom.
4. "Seven Minutes Financial Management" Luo Yuanshang has a basic understanding of funds after reading the previous books. This book is considered a practical book, teaching you how to buy a good fund and how to use it.
Only funds earn income.
Mainly learn the profit-taking method mentioned in the book, which I think is very good.