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Why some investors give stocks so high PE?

PE ratio also known as Price to Earning ratio and the most popular ratio among the investors. They use this to identify undervalued or overvalued stocks.  we already covered what is PE ratio and how you can utilize this ratio, if you want to learn about this then simply click here . The very basic logic behind PE is, If earnings low then PE high and If earning high then PE low. In general parlance if stocks PE high then it considered as overvalued and if stock comes with low PE then it considered as undervalued. Generally people avoid investing in stocks with high PE but everything comes with exceptions.  Stocks with high PE means "people and investors are willing to pay high prices for low earning stocks". Why people or investor doing so ? there can be various reason behind this, after all its a stock market and everyone have their own perception. Reasons can vary person to person. There can be various reason for paying high PE stocks and one reason can be,  Investors are ve

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My Investments and COVID-19

Everyone has witnessed huge market decline in the month of March when our PM Narendra Modi suddenly announced lockdown to tackle covid pandemic. Sensex stock market index reached all time high of 42273.87 in January of 2020 and from there it fallen down to below 26000 pts, nearly 40 % down. And from there it started healing. My Investments and COVID-19 Before this great fall my all investments were in undervalued stocks with very low P/E multiple, attractive earnings and exciting track record. Thanks to this quality stocks my own portfolio fall nearly 22 %. Although my 22% of capital vanished, I feel very delighted my portfolio beaten the market index(Sensex down nearly 40%) with significant points.  In the last year of your college generally you are not backed with huge capital support, and your capital is very limited. So securing capital is my first priority. Back on the track, I sold all the stocks with 22 % capital loss and secured rest of the principle capital

What Warren Buffett said on fear and greed ?

What Warren Buffett said on fear and greed ? In his 1986 annual letter to Berkshire Hathaway's shareholder Buffett said very interesting thing about fear and greed. He also accepting that anticipating market is always out of his circle of competence. For me these lines are the best lines of 1986 letter. So I putting whole para as it is in front of you. please read- "What we do know, however, is that occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. And the market aberrations produced by them will be equally unpredictable, both as to duration and degree. Therefore, we never try to anticipate the arrival or departure of either disease. Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."

Planning of investment during COVID-19

Planning of investment during COVID-19 I am expressing my opinion and I reserve the right to be wrong. Before corona world have seen so many deadly viruses or deadly wars like swine flu, plaque, WWI, WWII etc. And each time human race prove themselves and back to the race even stronger. Although these situations affected economy very badly but one thing everyone accept that - every pandemic  or bad situation support selective industries like during war, arms manufacturing companies earn most and during pandemic associated with diseases its medical and health insurance industry which earns most.   So there lies a trick. If you follow this trick while making investments then in long term your investment can produce honey for your bread. In war situation arm industries earns most and during disease medical and insurance industry earns the most but trick lies in the durability of these type of situation. Question - how long it can sustain? its permanent or temporary? Most

Amazing story which Warren Buffett shared to the Shareholders of Berkshire Hathaway

Letter 1985 Amazing story which Warren Buffett shared to the Shareholders of Berkshire Hathaway Ben Graham told a story 40 years ago that illustrates why investment professionals behave as they do: An oil prospector, moving to his heavenly reward, was met by St. Peter with bad news. “You’re qualified for residence”, said St. Peter, “but, as you can see, the compound reserved for oil men is packed. There’s no way to squeeze you in.” After thinking a moment, the prospector asked if he might say just four words to the present occupants. That seemed harmless to St. Peter, so the prospector cupped his hands and yelled, “Oil discovered in hell.” Immediately the gate to the compound opened and all of the oil men marched out to head for the nether regions. Impressed, St. Peter invited the prospector to move in and make himself comfortable. The prospector paused. “No,” he said, “I think I’ll go along with the rest of the boys. There might be some truth to that rumor after all.”