We park our hopes in PE ratios

When it comes to money, we, humans, are so fascinated with the unknown and the inexplicable.

Take Bitcoin for instance.

Most of us know that Bitcoin is a Cryptocurrency that has appreciated a million folds over the years but you ask a random person how Cryptocurrency really works and you get a half-baked answer.

Stock markets are a similar story.

Tesla is trading somewhere around 1000 times its earnings. (PE ratio)

This means people are paying 1000 Rs for Every 1 Rs that Tesla earns today.

No wonder why Elon Musk is the second richest person in the world (richest a few weeks back).

Well, Coal India is trading somewhere around 6 times its earnings.

People are 1000 times more hopeful towards uncertainties around electric vehicles than coal, a resource that will remain a stable source of thermal power for most of the 21st century.

It is interesting.

PE ratios are interesting, it tells you where people are parking their hopes.

Back in 2013, Facebook’s PE was 110.

Today it is somewhere around 25.

You know where Facebook is heading.

Zoom Video Comm has a PE ratio of 150.

In July 2020 it was 1500 🙂

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