Quick Recap – What is P/E? Understanding P/E Ratio – Formula: P/E = Price per Share ÷ Earnings per Share (EPS) – High P/E: Investors expect growth. – Low P/E: Stock may be cheap or growth is low.
Negative P/E Explained Why is P/E Negative? – Occurs when EPS is negative (company lost money). – Signals the company is not profitable currently. Often shown as N/A on financial sites.
Why Companies Lose Money Reasons Behind Negative EPS – High-Growth Startups: Investing in R&D, marketing, and growth. – Cyclical Companies: Losses during economic downturns. One-Time Expenses: Lawsuits, factory closures, restructuring.
Pillar 4 – Risk Management – Never risk more than 1–2% per trade. – Always use stop-loss orders. Fast, precise execution via brokers like FirstECN ensures your risk rules are enforced.