Fabio Castillo Marco @Fabiocm: "🚨 𝗧𝗶𝗽 𝗼𝗳 𝘁𝗵𝗲 𝗗𝗮𝘆..."

Spain

🚨 𝗧𝗶𝗽 𝗼𝗳 𝘁𝗵𝗲 𝗗𝗮𝘆 👉 𝗣𝗘 𝗻𝗼𝘁 𝗣𝗥𝗜𝗖𝗘 Avoid a very common mistake! Many new investors refer to stock price to decide when a stock is cheap or not to buy. That’s the wrong indicator. ⛔️ Stock price just indicates a cost level on a certain moment. If price lower than yesterday means stock is cheaper than yesterday but it doesn’t mean the stock is certainly cheap. E.g. A stock split can be executed by a company, this will cut stock price by a half, stock price will be a half from one day to other but company value will remain the same. ✅ A more reliable indicator could be PE ratio (Price/Earnings). This will indicate how high the stock price is comparing to its yearly earnings (intrinsic value). If a company historically is at PE 12x and now is at 24x, it could reflect an overbought stock (expensive). However if PE 8x it could be an undervalued company and a good opportunity to buy (cheap). Of course there are many other factors that could affect, but let’s keep it simple now. PE Reference ▪️High value and quality companies with a very stable business such as Apple or Coca-Cola are constantly at PE 24x ▪️ Automotive and Banks (cyclical business) are normally at PE 8x ▪️Growth companies are easily PE 80x 👨‍🎓 Above is a very simplistic approach, but a valid reference for beginners to understand when a stock is cheap or expensive. All experienced investors we look at PE ratio and other indicators to evaluate if a stock is a buy or not, but never price. Hope this tip helps you to reach your goals. ⭐ 𝗢𝗳𝗳𝗶𝗰𝗶𝗮𝗹 𝗲𝗧𝗼𝗿𝗼 𝗣𝗼𝗽𝘂𝗹𝗮𝗿 𝗜𝗻𝘃𝗲𝘀𝘁𝗼𝗿 $DJ30 $SPX500 $NSDQ100 $TSLA (Tesla Motors, Inc.) $AAPL (Apple) $OIL $BTC $NVDA (NVIDIA Corporation) $GER40 $ESP35