^V^
Read carefully what he said esp this part :-
SR: But the higher earnings growth rate of growth stocks overcompensated for P/E compression, right?
VK: Not at all! Low-P/E stocks outperformed high-P/E stocks on a consistent basis throughout the 1966–1982 range-bound market.
***
He did not mention about "future earning " !
For a Low PE stock to roar , it is very much depend on its future earning, if its future earning stay flat n sustainable, u will hv mild return but definitely better than FD.
If its future earning grow i line with what u forecasted , u will hv fantastic return..that's for sure !
If what u forecasted gone holland ( earning turns into losses),
Low PE will also DIE ! (Example Megan !) but HIGH PE will die HARDER coz u bought at d peak !
Since both also die if its forecasted earning turn into negative , why should we pick high PE stock ?? think a little ..think ? u think u r playing US stocks ? u think u r buying coca cola or wallmart ? even wallmart selling at PE >50, is still not consider as value buy !
One classical example :- Gpacket
Those who bought at 4.50 based on rumours n speculation.
u r actually buying at PE of 44 (Damn bloody high )! as it can be seen, once his speculation call off n its latest earning came down, she drop like nobody biz to current level of 2.40 ! see how bad it was for buying high PE stock ?
Even u buy at 2.40, u r buying at PE 17 ! still not consider as low if u compare to masteel,liondiv n mahsing which giving u PE of 4+, 8+ n 9 + !
Is P N E not d key success ? need a second thought ?
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