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Why a low price-to-earnings ratio isn’t always a good thing

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Think a low price-to-earnings (P/E) ratio is a good thing? Think again.

It’s kind of like a reflexive action — a habit that is so deeply ingrained and conditioned in the minds of investors who pray at the altar of low P/E’s that some just can’t get away from it. It’s not always a good thing, and you should understand why, because it can help you avoid value traps.

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