#7 Investing 101: How To Think About The PE Ratio?

High PE is not always bad and low PE is not always good. So, how should you really think about the PE ratio?

There are magic numbers in every game.

In soccer, it’s three. If a player scores three times in a game, it’s called a hat-trick. Children playing street-soccer gain 1 penalty for every 3 corners.

In basketball it’s 10. If you do 10 points and 10 assists, it’s double-double. If you add 10 rebounds too, it’s a triple-double.

In investing it tends to be 15.

Wh…