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PE- Price to Earnings (ratio) is one of the most common and probably the oldest known ratios used for valuing stocks and companies and even businesses. Interestingly, its also the most misunderstood ratio- purely because of the multiple implications that correspond with the market scenarios and conditions during the said period of time.

Lets understand-

What is a Price to Earnings Multiple ?

By definition it is the fraction of “What you pay” divided by “Periodic Earnings” of what you pay for. The numerator is an absolute amount while the denominator is (probably) recurring, hence PE can also be interpreted as the number of periods required for the investment to…

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Is your “let’s get wealthy strategy” actually scalable? or is it something that has simply been working recently?

Let’s Understand

As traders have recently been boasting about magnificent returns viz- a few %points a day. How far is that scalable?

Warren Buffett, the Oracle of Omaha has only managed to compound at roughly around 20% since 1965 over a 252 day year that’s less than 0.08% a day. However, his strategy has been scalable starting from a humble $7 million to currently over $269 Billion (value of listed holdings only).

But you’ve been trading and it’s worked well? …

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Power of compounding

The 8th wonder of the world

Probably no one ever called it so, however we all know enough about it and still chose not to enact on it.

The goldmine, we are referring to here is your “savings” while mining it would obviously in this case mean investing it/ accumulating it. A major misconception we come across while discussing savings with people is how they fail to look at the longer term bigger picture. Another major crisis among those who are early employees is how weak they consider their early income. Lets understand from the table below:

The above…

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What is Leverage ?

Interestingly, “leverage” finds itself in most discussions around bad business and blow ups or bear markets, usually also synonymous with “blow ups” but what exactly is leverage?

Leverage is the use of “borrowed money” to magnify return

to further simplify leverage is when a business would borrow and invest to earn incremental ROCE, however this process is only profitable for as long as such ROCE remains greater than rate at which money was borrowed.

The Evil Reputation of Leverage

Interestingly, Leverage has only been spoken off when things are falling apart. …

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What is Value Investing!

The term refers to a strategy of buying stocks that “appear” to be trading below fair value. In theory, the practice of investing in stocks that currently trade “cheap” but have the potential to handsomely reward the investors in the future. The term, however, has been used to collectively represent the investing philosophy first taught by Benjamin Graham and David Dodd.

The concept worked brilliantly back in a time and age when people did not understand Investing rather when they barely had funds to invest. For those who did, credible actionable information on stocks was not easily available. Investors would…

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While we are not sure if the “Annual Reset Concept” is something unique, We hope this goes a long way in changing how “Portfolio Management/ Fund Management” has been performed in the past to benefit the investor/client more than the manager or the fund.
But first, let's highlight what “Portfolio Management” means and what flaws need fixing.

Portfolio Management

Has been a fairly new concept, in theory, however, we believe it has been in existence since the inception of equity rather since the inception of investing. While probably back in the day it must’ve been more about asset allocation, today we have…

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The idea of investing to grow rich and financially independent has evolved around the foundation of having free time. Time to do things which have a higher non-material significance. For most people investing is a way to retire early and follow their hobbies or be able to spend time with their family.

However, in recent times while investing has become easier and more accessible by almost anyone- it’s got it’s vices along.

Recently, the markets have made available an interesting investment instrument through the “Index ETF”. …

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Stock Markets and investing have changed over the years since inception only getting more efficient in time. This is evident from how value investing has failed to consistently generate alpha as it once used to- majorly owing to better technology, higher participation of people (in multiple roles), and ease of flowing capital. These factors have not only made it difficult for a “Bargain” to remain available they have instead lead to the major problem of Value Traps- wherein, a visible probable value bargain actually turns out to have priced in future negative information- Information Asymmetry. …

Craving Alpha

Leveraging Research and Data Science to create actionable investing strategies in the stock markets. All posts are educational | more on

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