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Lessons of Investing: Price Is What You Pay Value is what you get.

 I have been doing this series for a while and today I wanted to talk to you about the PE ratio and how it is not the be all of valuation (Cash Flow is just as important). The thing many miss is a big PE does not mean exspensive and a small PE does not mean cheap. Warren Buffet once said that growth and value investing are joined at the hip and this is quite true. Does this mean don't use this as a valuation metric? No but what is quite clear is growth when paid a reasonable price for is the key to doing well in the stock market. It was a exspensive lesson but those are often the best kind. In my opinion Garp is the investing method that works and there is no real difference between value and growth investing you only need not overpay to do well. What is the moral of this story?  Really the moral is value can take many forms so don't justify or deny a purchase based soley on a single ratio.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.