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If socialist principles of FinTwit influencers engulfed the real world, PEs will be capped by FinTwit law on either end.
Most commentary sadly obsesses on PE than its drivers much less the real Earnings & Cash Flow which is of paramount importance. (1/n)
Most commentary sadly obsesses on PE than its drivers much less the real Earnings & Cash Flow which is of paramount importance. (1/n)
Real focus should be on where the earnings will be rather than what should be the "right" PE. It is easier to get Earnings Expansion rather than get both Earnings & Multiple Expansion. Low Multiple stocks do not guarantee expansion. Rerating/Derating is NOT in your hands (2/n)
PE/RTM obsession blindsides investors to recognize that
a) there are different ways to make money
b) High growth/long runway stocks can throw earnings 18m hence that the post-facto Entry PE is not so high after all (3/n)
a) there are different ways to make money
b) High growth/long runway stocks can throw earnings 18m hence that the post-facto Entry PE is not so high after all (3/n)
c) Disruption free businesses where drivers of E are predictable and E can sustain for 10-15 yrs or more compensates a plausible derating with earnings growth
d) Investors in b) & c) also make good returns though they get trolled the max. even if 1-2 bets goes wrong! (4/n)
d) Investors in b) & c) also make good returns though they get trolled the max. even if 1-2 bets goes wrong! (4/n)
Disservice is done when weak hands who hold b/c sell on twit noise losing compounding+take reinv risk. During Covid, NPAs were projected to touch the moon, MD retired & many sold Tier 1 FIs; Other views-Homes cant afford paints/branded mid/prem FMCG not selling/0 innerwear mkt
