Eli5 the concept of using Market Capitalization and P/E Ratios to choose stocks to buy
In: Economics
In general, if a company has a low P/E ratio you would buy it because you believe that it’s mispriced and that it’ll bounce up when others recognize its true value. By contrast if the company has a high P/E ratio the stock is high priced, and you’d only buy it because you believe the company has growth potential.
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