Oct 30, 2014

Stock Market Quotes

Warren’s quotes:

"The most important thing to do if you find yourself in a hole is to stop digging."

"Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks."

What is Stock Re-rating: Stock market Knowledge

What is re-rating?

Re-rating in the stock markets simply means that investors are willing to pay a higher price for shares, usually in anticipation of higher earnings in the future. What re-rating of shares does is that it expands the P-E ratio. Here is an example. If shares of company A are trading at Rs.100 per share with earning per share at Rs.10, it also means a P-E of 10. But if the share price shoots up to, say, Rs.200 and the earnings per share also goes up to Rs.15, the new P-E will be 13.3, which is higher than the 10 in the previous period. If the market is willing to pay a higher price compared with earnings for the shares of company A, it will be termed as re-rating of shares by the market.

Read more at: http://www.livemint.com/Money/5lfzconRmmBHwPSFXaPx7H/Dejargoned-Rerating.html?utm_source=copy