3 ms·

It is probably very similar when it is stocks that are nearing bankruptcy or otherwise have horrid fundamentals. If the stocks do have fundamentals and the PE

It is probably very similar when it is stocks that are nearing bankruptcy or otherwise have horrid fundamentals. If the stocks do have fundamentals and the PE ratio makes sense relative to the growth factor, then it isn't pure gambling.

iso1631 6y ago
The S&P hit 4,000 today, with a P/E ratio of about 40:1. On Jan 1st 2020 it had a P/E radio of 25:1 Does that make sense?
- pedrosorio 6y ago
  Given the past few months have seen conditions that led to abnormally low "E" that are not expected to be repeated, and at the same time the amount of cash available to inflate "P" increased dramatically... maybe? Disclaimer: I know nothing
jandrese 6y ago
I think there is an argument to be made that as stock growth has outpaced GDP growth for many years now that the connection between the markets and the real world has become tenuous. The fundamentals become less important over time as crazy speculation continues to win out. GME is a symptom of a broken system.
- frockington1 6y ago
  What is broken about it? People were over leveraged and others acted on it. Seems to be working as intended. If GME is at this P/E a year from I'll agree with you
  - jandrese 6y ago
    The complete disconnect from reality? How much of that money is going to be available to Gamestop to turn their business around? How is this different than gambling on horse races except that instead of horses you have corporations?
    - frockington1 6y ago
      Difference is all about ownership. You don't own a portion of the horse, you own a stake of the outcome of one race. When you buy a share of a company, you own 0.00001% of said company. Gamestop does not have access to that money as they sold their stake in exchange for cash at a past date. As a shareholder, you can use your stake to vote in shareholder meetings and if large enough be on the board to help turn the business around

iso1631 6y ago

The S&P hit 4,000 today, with a P/E ratio of about 40:1. On Jan 1st 2020 it had a P/E radio of 25:1 Does that make sense?

pedrosorio 6y ago
Given the past few months have seen conditions that led to abnormally low "E" that are not expected to be repeated, and at the same time the amount of cash available to inflate "P" increased dramatically... maybe? Disclaimer: I know nothing

jandrese 6y ago

I think there is an argument to be made that as stock growth has outpaced GDP growth for many years now that the connection between the markets and the real world has become tenuous. The fundamentals become less important over time as crazy speculation continues to win out. GME is a symptom of a broken system.

frockington1 6y ago
What is broken about it? People were over leveraged and others acted on it. Seems to be working as intended. If GME is at this P/E a year from I'll agree with you
- jandrese 6y ago
  The complete disconnect from reality? How much of that money is going to be available to Gamestop to turn their business around? How is this different than gambling on horse races except that instead of horses you have corporations?
  - frockington1 6y ago
    Difference is all about ownership. You don't own a portion of the horse, you own a stake of the outcome of one race. When you buy a share of a company, you own 0.00001% of said company. Gamestop does not have access to that money as they sold their stake in exchange for cash at a past date. As a shareholder, you can use your stake to vote in shareholder meetings and if large enough be on the board to help turn the business around