Ndubuisi 'Andy' Egwim breaks down the price-to-earnings ratio as a way to see how fast you get your money back from a stock. He calls valuation a superpower, even if you end up buying index funds instead.
That's what a PE is. That's what it is. Once you get that in, I don't know why they never define it in that simple way. It's simply how quickly can I get my money back? We understand these basic principles then. Valuing a company is a superpower. You see, valuing a company is a superpower. Even if you decide oh I've done this valuation thing is hard. I'm just going to buy index fund. But it's just like a lot of things, you know, that you don't use. I play the piano. I'm not a classical pianist or. You're a doctor. You, you. Yeah, I didn't quite make it as clinical a classical pianist. I didn't get get to Julia, but it's the same thing your doctor, you might know how to do joint injections but your day to day activity doesn't require that. So understanding valuation is important and what you just said, price to any ratio tells you how quickly you can get your money back.
