Chart of the week: Buy low and sell high?
Put crudely, the job of an active investor is to buy low and sell high. Identifying companies and markets that are ‘cheap’ (attractive) and ‘expensive’ (to be avoided) is commonly done using PE ratios, the price divided by the underlying annual earnings for that company or market. But in all but a few specific situations, when it comes to choosing one investment over another, it’s often more hindrance than help, especially over shorter time periods. Read more about why this popular measure of equity valuations is often misunderstood in ‘Bargain hunt‘, an article in our latest InvestmentInsights.