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  • Apple $400: A Look at Apple's Fundamentals (Part II) [View article]
    I'm glad you can read a dictionary,what this has to do with my argument about P/E ratios escapes me.
    Aug 18, 2010. 08:45 PM | Likes Like |Link to Comment
  • Apple $400: A Look at Apple's Fundamentals (Part II) [View article]
    If you care to look past one comment you'll gain an insight into my investment experience. If you understand the Buffet quote and the context within which it was made, you'll understand that it distills a lot of knowledge about price and value into a few words. I thought that might be helpful for a non-expert audience. Maybe I overestimated the quotes utility.

    You both overestimated your own utility and underestimated your audience by wasting a few paragraphs with grade school platitudes.
    Aug 15, 2010. 07:35 PM | Likes Like |Link to Comment
  • Apple $400: A Look at Apple's Fundamentals (Part II) [View article]
    What you think the P/E ratio is or isn't supposed to do is of no interest to me. The P/E ratio is not a valuation metric, never was and never will be.

    The P/E ratio cannot tell you a stock is cheap or expensive. A stock with a P/E of 50x can be cheaper than a stock with a P/E of 10x, if you don't understand this elementary concept you have no business investing in the stock market. All a P/E ratio can tell you is what investors are willing to pay to own shares in a company, based on their expectations of the future.

    Earnings by themselves are meaningless. To understand why one company's earnings are more valuable than that of another you need to take into account how much equity it takes to produce those earnings, how much of those earnings are redistributed in the form of dividends and retained for reinvestment back into the business.
    Aug 15, 2010. 06:37 AM | Likes Like |Link to Comment
  • Apple $400: A Look at Apple's Fundamentals (Part II) [View article]
    Warren Buffet: ‘Price is what you pay and value is what you get’

    That means that price and value are two very different things, so how can a model produce a ‘value’ when one of its inputs is ‘price’?
    Aug 13, 2010. 06:06 PM | 1 Like Like |Link to Comment
  • Apple $400: A Look at Apple's Fundamentals (Part II) [View article]
    PE ratios cannot be used to determine if a stock is over or undervalued. If you believe that the price of a stock and it's value are two separate things, how can you use price in the calculation of value?
    Aug 13, 2010. 04:11 AM | 2 Likes Like |Link to Comment
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