Collection: Warren Buffett - #75 Investing 'Relative & Absolute P/E Ratio Explanation'

Video Link: https://youtu.be/q2EB9_awA5o

[My Takeaway]

You don't have to choose something difficult to earn a lot of money in investing.

[Full Videos of Berkshire Hathaway Annual Meeting 1998]

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[My 2 Cents]

Why does it P/E Ratio move up?

1. Relative price-earnings ratios move up because people expect either the industry or the company’s prospects to be better relative to all other securities than they have been — than their proceeding view. And that can turn out to be justified or otherwise.

2. Absolute price-earnings ratios move up in respect to the earning power — or the prospective earning power of — that is viewed by the investing public of future returns on equity, and also in response to changes in interest rates.