Latest / How Canadian Markets Work
Episode 77: Value Ratios (The Cyclical Trap)
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Episode Summary
This episode addresses the common but highly dangerous retail impulse to buy a stock simply because it looks cheap on a price-to-earnings (P/E) basis. We expose the cyclical trap that dominates resource-heavy markets like Canada, showing why a commodity producer or oil company often looks cheapest at the absolute peak of the economic cycle when its earnings are temporarily inflated. When the cycle turns and earnings inevitably fall, what once looked like a bargain at four…
The skinny
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