Sunday, October 30, 2011

External Publications - 10/30/2011

One article is published on today.
  • The Right Way To Estimate Industry Ratios: Industry ratios are more important than those of an individual company. A low PE ratio of a company could be distorted by various one-time items thus may not reflect the real earnings power of the company. But a low PE of an industry is often a sure bet for a structural opportunity. One-time items will positively impact some companies in the industry while negatively impact others. Those will cancel out one another. Likewise, some companies will adopt aggressive accounting schemes and others with conservative ones. Probability theory dictates that the "average" of a group of numbers resists the errors that may severely impact individual ones. With less error, industry ratios are more likely to reflect the industry's financial strength...

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