GREY:ANSBF - Post by User
Post by
dosperroson Apr 01, 2013 8:50pm
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Post# 21195324
Valuation note
Valuation note I am of two minds of P/E. One one hand it is not a legitimate valuation echnique for volatile industries. It is backward looking. It works for diversified, stable firms with steady earnings (GE for instance.)
Where P/E is fun, for me personally, is where someone looks at P/E and sells to me because it’s “outragoeusly high.” When one bases a sell secision on 2012 data (OSB margins at maybe 10%) and disregards the forward-looking 2013 margin of perhaps 40% to 70%, it lets me buy cheaper than I would normally. Change is inevitable, just not from vending machines. When change is sweeping and profound it distorts some basic finance tools.
Like I said, good and bad.
/DP