Member-only story
When I started out to invest, no one told me how to make smarter decisions. I invested on my gut feeling and what I thought would be a good investment. I didn’t know that what I was doing is not investment, it is just speculation! I was just playing a gamble on my money. In an attempt to help my fellow investors, I am writing this short guide that summarises just the top 5 fundamental metrics that every investor should know.
My hope is this: Tomorrow, if someone asks you why did you invest in Stock ABC, instead of giving them a puzzled look, you should be able justify your investment with a solid backing of these simple yet fundamental metrics.
1 | Price-to-Earnings (P/E) Ratio
What is the PE Ratio?
The Price-to-Earnings (P/E) ratio is one of the fundamental metrics every investor needs to know. As I covered in my earlier article, the price movements of a stock reflects the market sentiments of investors towards the business and how it will perform in the future.
The P/E ratio is a metric that compares the market value of a stock to the company’s earnings.
