FAST Graphs Tutorial: The Normal P/E Ratio (The Blue Line) - What It Is And How It Works

[@dinueduardmadalin2321]

great job, Chuck!

[@jeromelebel9486]

Good job on the new version of Fastgraph. I use it every morning on my iPad, very satisfied with the latest improvements

[@mrinternationalmoneyprinter]

awesome chuck, that you made directly a video because of my comment. fast graphs is an awesome tool and thanks for explaining!

[@timdog1863]

I learned a lot in this episode Chuck. Thank you!

[@JJJ5.7]

Tool and analysis are great.

[@MrNoBSgiven]

CHUCK! As usual, your no-nonsense approach to investing is priceless. Being a fastgraphs subscriber and believel in macroeconomic I used your software to make not only buy, but sell decissions. Right now,mwith the market valuation being way to high (buffet indicator, global market P/E) and the train of FED reckoning has started I am out of stocks except intel and LYB (foolish me) and moved into the capital preservation (treasuries/cash). I will stay put until the market corrects to more resonable levels and then will go long again.

[@captnhuffy]

100 out of 100 (same thoughts, same investments. lots of dry powder)

[@chuckdiezel7652]

I like to use the normal PE but I also add my own custom pink line PE frequently. If you click on the gear you can add your own PE. In the past 3 years I have not bought a stock unless I have thoroughly researched it in FAST graphs (among other research)

[@FASTgraphs]

you are using the tool as it was designed to be used. Thanks

[@tulsatom4307]

@@FASTgraphs I use the PINK (Custom) PE Line also, TWICE, similar to Dividend Freedom Tribe’s Graphing * First, to approximate the BOTTOM, common reversal/turnaround for Buy/Add decisions (DFT’s 25th Percentile; and pretending that the Normal (Blue Line is the 50th Percentile) * Second, to approximate the TOP, common reversal/turnaround for Sell/Trim decisions (DFT’s 75th Percentile; ** Remember that the PINK Line is Dynamic/Relative, so it Changes - with Time Period Changes and - will need to be re-discovered when you change Time Periods - and/or Tickers (different stocks) ** I wish there were TWO (2) Custom P/E Lines so that we could plot above (75th) and below (25th) at the same time, on the same graph

[@patrickmattison9857]

Thanks for the tutorial Chuck! As a long time FastGraphs subscriber I would love to see a tutorial on the "Debt to Cap' feature. I am confused by it and don't know why.

[@msdesf]

Thank you for the video Chuck. I have been a FAST Graphs subscriber for months and have seen how its features and capabilities are extended by the development team. However, most of these features are enjoyed by the premium subscribers, good for them! But I wonder if you have any plans to provide basic subscribers access to some of the new features too.

[@e_Moses]

It is unfortunate that basic subscribers haven't gotten much love over time. I think unlocking all the metrics in the Fast Graphs section could be something that they could do.

[@minghigh]

Chuck, if you can add ROIC to your graphs, it would be killer

[@denisbeaulieu5600]

thanks Chuck

[@JamesWhite1]

Is there any update on international stocks (mainly UK/FTSE) coming to FG's? Thank you, love the tool and the videos, both have helped me a tremendous amount with my investing!

[@FASTgraphs]

shooting for the engineer already in progress

[@JamesWhite1]

@@FASTgraphs excellent thanks for the update!

[@FASTgraphs]

the end of the year was auto corrected to engineer and I missed it sorry. LOL

[@JamesWhite1]

@@FASTgraphs haha that's great, I read it as you were trying to hire an engineer to do the work, but ended of the year would be great

[@captnhuffy]

100% PE 15 is the norm, the benchmark. Anything at or below 12, and at or above 18, gets a "flag". From there a closer examination of Growth and Forecast is needed - needed. Balancing FOMO & LossLeader sits in the back of my little, little, mind

[@delliott777]

Awesome! Is there a video where other metrics are explained with a little more detail? P/E=G GDF…P/E=G Blended P/E Thank you!

[@FASTgraphs]

many tutorials coming soon. requests accepted.

[@delliott777]

@@FASTgraphs thank you, looking forward to it. Your video releases always make my day.

[@brijeshkukreja7411]

Great Tutorial. I would stick to good companies like PRU, AFL, CIgna where the blue line is under the orange line AND Black line is under the blue line which makes it undervalued P/E

[@Sylvan_dB]

You've been reading my mind. I was wondering last Friday evening exactly this question - what is the FASTgraph "normal" P.E.? How is it calculated?

[@TKrakowski1]

Can you review what your thought process is when selling a stock? How overvalued does it need to get for you to consider selling?

[@FASTgraphs]

Hi TKrakowski1 - here are three links to articles/videos Chuck has produced on Selling: www.fastgraphs.com/blog/answering-the-important-questions-when-to-buy-or-when-to-sell-a-stock-part-1/ www.fastgraphs.com/blog/the-worst-reasons-to-sell-a-stock/ www.fastgraphs.com/blog/answering-the-question-when-to-sell-a-stock-part-1a/

[@TKrakowski1]

@@FASTgraphs Thank you! These articles have given me some food for thought.

[@dutchcourage433]

FAST Graph is great software and I'm a very happy user. But it would even be more wonderful if there would be a function like the ''8 pillars' in de the software from Everything Money. Adding the new Health Check function is a step forwards, but seeing the value of the most used metrics under 1 button would be awesome! Think like CFO > Net Income, Net INcome growth trend last 5 years, etc.

[@FASTgraphs]

coming soon already in progress

[@minghigh]

Adding ROIC to the graph would be killer

[@teamvigod]

Why is the GDF...P/E=G almost always 15? For a company that is growing for a decade at 30% for example shouldn't that number be higher? 15 would not be normal for a faster growing company. 15 is only a benchmark for a low single digit growth company typically. Just trying to understand the value of that being 15 for almost every single company. What triggers it to exceed 15? thanks

[@udarpavarota396]

Chuck, man, cut me a deal. I'll refer 10 people to you if I can get a free annual subscription to F.A.S.T. Graphs.

[@hithere4147]

First! Lol

[@captnhuffy]

6th .... har

[@martindolinsky1118]

365th ;)

[@puppypuppy1448]

What grade are you in???

[@larrymelman]

I've read your articles and watched your videos for many years, and I just can't get past basing all your analysis on arbitrary "lines". You plot a "blue line" through the historical stock price data. Then you compare to an orange "PE=15" line. Unless you want to use an orange "PE=G" line. Unless you decide to use the blue line after all. And this is often without real knowledge of what a company really does (yes you often read some superficial boilerplate off of Zacks or a company website) or what its industry does or what the company's relative position is within that industry. Or national market conditions or global market conditions or other factors. Everything you do and say is based on looking at historic stock price relative to those arbitrary "lines". I'm not saying I have a better answer. But I don't really believe in what you're doing, either. Maybe the random monkeys are right after all.

[@FASTgraphs]

there is nothing arbitrary about the lines. The blue line (normal P/E) is simply the average value the market has valued the stock over the timeframe being measured. it is an analytical reference line. The orange lines are based on widely accepted formulas for value stocks. It also valuation reference line. The analysis is not based on that is simply identifies it is used for analytical purposes to assist in making sound long-term decisions. finally, there are several external links offered to assist the subscriber in looking at completing a comprehensive research and due diligence process. Also, there is not a research tool in existence that doesn't history of the company to provide information.

[@puppypuppy1448]

Clearly you'll get nothing from FASTgraphs and certainly have nothing positive to contribute, so move on.

[@blackstarmaster]

Good tool, too expensive, therefore useless