A Place for Learning and Practicing "Value Investing" Taught by Benjamin Graham and Successfully Executed by Warren Buffett.
Tuesday, September 6, 2016
Start Saving Young-Poem
Start Saving Young;
Keep Investing when Still Young;
Nurture Investments Very Long;
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Give Old-age Dependence the Shun;
Make Retirement Life a Song;
Give your suppressed Dreams Wing;
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Definition of Price to Earnings (PE) Ratio
Definition:
Price to Earnings or PE ratio is the proportion or relationship, expressed as a number, between the market price of a stock and the scrip's earnings per share or EPS.Formula:
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| Price to Earnings Ratio Formula |
Example:
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| PE Ratio of SJVN Ltd. |
Further Reading:
- What Is Price To Earnings Ratio?
- Earnings Per Share (EPS) - Definition
- What is Earnings Per Share (EPS)?
- Price to Earnings Ratio - Formula
- Earnings Per Share (EPS) - Formula
- How to Find The Fair Price of A Stock?
- How to Calculate ‘Price to Earnings Ratio’?
- How to Calculate 'Earnings Per Share' or 'EPS'?
Investing - Definition
Dictionary Meaning:
The dictionary meaning of the word 'Investing' stands: "Put (money) into financial schemes, shares, property, or a commercial venture with the expectation of achieving a profit".
The unsaid words:
Even though the relatively longer timeframe or permanence is not visible in the formal definition, it is an inherent part of the meaning, as opposed to saving, which is well perceived as a temporary setting-aside. Therefore, unlike savings, investments need to be left undisturbed for fairly long time.
Another unsaid element is safety - of investment or principal. What ever does not guarantee safety does not fall under the term investing. Thus highly speculative activity of trading/ day trading and margin trading in currencies, commodities and stocks do not amount to investing.
Conclusion:
Summarising the ideas, the term investing can be broken down into the following vital components or ingredients:
The dictionary meaning of the word 'Investing' stands: "Put (money) into financial schemes, shares, property, or a commercial venture with the expectation of achieving a profit".
The unsaid words:
Even though the relatively longer timeframe or permanence is not visible in the formal definition, it is an inherent part of the meaning, as opposed to saving, which is well perceived as a temporary setting-aside. Therefore, unlike savings, investments need to be left undisturbed for fairly long time.
Another unsaid element is safety - of investment or principal. What ever does not guarantee safety does not fall under the term investing. Thus highly speculative activity of trading/ day trading and margin trading in currencies, commodities and stocks do not amount to investing.
Conclusion:
Summarising the ideas, the term investing can be broken down into the following vital components or ingredients:
- It is an Act of putting or placing
- Money
- Into financial instruments or property or a commercial venture
- For a relatively longer period of time, unlike saving, which is temporary parking
- With an intent to earn a gain or profit or income
- Activity ensures safety of sum invested
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| A Man Investing Money in Stocks |
Whats is Not Investing:
Short term and speculative activities of trading in currencies, commodities and shares, though disguised in the respectable term of investing, clearly do not fall under the definition of investing.