Tuesday, February 14, 2006

The three rules of the Street game

Rule 0: Stocks are eventually valued by forward P/E. This is the fundamental rule.

Rule 1: Analysts are very smart crooks employed by big money.

Rule 2: Your goal is trying to win money by buying and selling stocks.

Commentary:

*) Sometimes the crooks may even try to create a perception that Rule 0 is changed, for instance, they may try to redefine valuation formula to other seemingly justfiable schemes, as we have witnessed in the dot.com era.

*) Big money also has control of media.

*) Crooks may tell truth, but it all depends on timing.

*) To win, you must be smart.

2 Comments:

Anonymous Anonymous said...

So what do you think of the AMD P/E of 105 (yahoo amd stock summary, today) ?

9:42 AM, February 15, 2006  
Anonymous Anonymous said...

Stock value is based on future. AMD forward P/E is about 20. INTEL may have a P/E of 15 today, but its forward P/E is very much in question.

12:55 PM, February 15, 2006  

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