Any Stock Tips? - Part 3

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the harry said:
It is definitely a thing. Whether it is useful or not is really dependent upon your own preferences.

It's a good guide to limit the downside risk. Eg. buy at P/E of 10 and profits halve the following year, you've still got a 5% return, buy at P/E 40 and profits down 10% and you've got only 2.25%.*

In essence, anything over 20-odd you're expecting a significant change in the profit for the company, they become speculative.

I like it because I don't like losing money and high P/E ratios are a good way to lose money quickly if things turn bad (if you invest $1k, and lose 50%, you need to get 100% return on the remainder to break even. Much rather just tick along at 7-10% if possible).

The academic literature show (with obviously some issues surrounding the delisting of companies) that low P/E ratio companies perform better, on a risk/return basis.

*Return is based not on the change in market value, but rather the return your portion of ownership in the company generated.
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yep

people often factor in future growth but anyone in business will tell you that growth always takes longer and costs more than predicted. 95% of what I buy is growth stocks and hold for 3-8 years.

The returns have been `35% pa between 97 and 2007 and 65% plus pa post 2007. Meaning the risk is worth it but only if you can directly influence management as a small stuff up can really hurt as you highlight.
 
it isn't always speculative, though. some companies trade perpetually over 20 P/E, just because they're solid as a rock. argo investments (ARG) as an example. have delivered reasonable dividends twice/year without fail for 70 years. people are willing to pay a bit more for that kind of low-risk consistency (currently at 23 PE). i don't think anyone is expecting a significant earnings upgrade, they're paying for the (relatively) low risk.
 

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how will yesterdays disaster at dreamworld affect Ardent Leisure Group in the long term? anyone do any research into the track record of them parks post disaster?

Seaworld a bit of an outlier/different i think because the killer whale issue is more a social issue.
 
The Edukator said:
how will yesterdays disaster at dreamworld affect Ardent Leisure Group in the long term? anyone do any research into the track record of them parks post disaster?

Seaworld a bit of an outlier/different i think because the killer whale issue is more a social issue.
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Merlin in England dropped about 4-5% after the smiler crash last year, but have been up and down a bit since then as the court cases unfold. So I wouldn't expect a straight down then up type scenario.
 
Biggies like Warren and George are selling their big stocks, except Warren sold his Walmart stocks yesterday. which was obvious in the time of growth of eCommerce sites like Amazon.
 

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Hi guys, new to all this....

Was speaking to a mate of mine last night about a "fake" or "simulator" portal or something where you can play the exact same market with fake money and learn it before I try out real money....

Any idea how to do this or where to find?

Thanks in advance....
 
Hu$tler said:
Hi guys, new to all this....

Was speaking to a mate of mine last night about a "fake" or "simulator" portal or something where you can play the exact same market with fake money and learn it before I try out real money....

Any idea how to do this or where to find?

Thanks in advance....
Click to expand...

Asx share market game will be what you're looking for
 
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