There’s a lot of confusion as well as debate amongst investors on what PE one should buy?
In general, avoiding high PE stocks will save you loads of trouble.
A portfolio with High PE stocks will most likely underperform Low PE stocks because there’s high chances of PE derating in case of High PE stocks & high chances of PE rerating in case of Low PE stocks. Of course, quality of business & management matters.
All my life, mostly, I’ve bought low PE high quality businesses & have made sustainable profits for me & people connected with me.
Don’t get carried away by social media & those dumping high PE stocks down your throats.
Margin of Safety matters in investing & low PE is one of the major components of high margin of safety.
P. S: There are many factors in making investing decisions apart from PE ratios.
The above is written purely from PE point of view assuming others factors remain favourable.
