First of all, look at whether it is a cyclical stock or an ordinary growth stock. If it is a bubble stock, especially the media and technology, it is the so-called market dream rate stock. However, if it is a cyclical stock, the absolute share price is very low, indicating that it is a turnaround, but because of the small profit, the calculated P/E ratio is very high. With the recovery of industry prosperity, the P/E ratio will quickly fall back to normal level. Similarly, if it is a cyclical stock, the price-earnings ratio is very low, but the absolute share price is already very high. Once the profit of a certain quarter drops, the price-earnings ratio will soar and the stock price will plummet. This is what Peter Lynch called the P/E trap.

For example, in the middle of last year, the PE of Jinyi Industrial was about 80 -200 times, but the absolute share price was very low, and the profit was slightly surplus to the losses in previous years. At that time, 8 yuan was 2 1 yuan.

By the way, 12 yuan left. Looking back now, I really didn't insist. If you choose stocks according to the price-earnings ratio, persistence is very important.