Warren Buffett explains the reasons for higher P/E ratios

Warren Buffett and Charlie Munger explain the reasons for higher price-earnings ratios. From the 1998 Berkshire Hathaway annual meeting.
Top ten investment books;
The Intelligent Investor by Ben Graham: amzn.to/2XP3Hvo
The Big Short by Michael Lewis: amzn.to/3ak7Wr0
The Dhandho Investor by Mohnish Pabrai: amzn.to/2PqQDgk
One Up On Wall Street by Peter Lynch: amzn.to/39JM2Kk
Ben Graham's Security Analysis: Sixth Edition, Foreword by Warren Buffett: amzn.to/2XNYtAh
The Little Book of Common Sense Investing by Jack Bogle: amzn.to/2UsGk8T
Common Sense on Mutual Funds by Jack Bogle: amzn.to/2Uxu2wl
Common Stocks and Uncommon Profits by Phil Fisher: amzn.to/2XOCU2v
Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger by Peter Kaufman: amzn.to/2oBddW4
The Essays of Warren Buffett: Lessons for Corporate America: amzn.to/3EwbNxx
(The above are affiliate links.)

[@Geotubest]

They really are brilliant. And love Charlie Munger too. Notice how he didn't miss any part of the question asked. They're both on top of everything.

[@Discovery_and_Change]

0:39 PEs move up because people expect the company to do better than others 1:00 Move up in expected earning power and future returns on equity, and changes in interest rates 1:24 Decreasing interest rates push up stocks 1:45 When people get more enthusiastic about a company, PEs get pushed up

[@TheIcelandicInvestor]

If our predictions have been better than other people, it's because we have tried to make fewer of them😆

[@fp3cr7]

I swear to god you're everywhere

[@SingaporeSkaterSam]

There was a study done asking people to answer some questions with a range they were confident would contain the actual answer. Almost without fail the respondents would provide a far tighter range than necessary to (safely) get a correct answer. Buffett’s comments at the end about degree of difficulty reminded me of this.

[@davidstevens3934]

Talking of ratios - look at the thumbs ups to thumbs downs! These 2 are pure gold. Actually in terms of their body weights they're worth a LOT more than pure gold.

[@mottykytu]

Warren worth more than Diamond I think

[@viralmehta7036]

Love how Buffet puts ice and coca cola in his glass. He loves the product so much

[@Kid_Ikaris]

Is Munger drinking wine up there?

[@Nile15rush_fj]

I would love the product too if i made many billions of dollars off it

[@brunomanco7529]

Well hes a seller, and hes selling his product

[@wizard7314]

He's just advertising it.

[@josephwhite9628]

They really are brilliant

[@Ben-qe8ju]

How long have these two been old?! What a duo though. Advice/knowledge as sound today as it was 22 years ago.

[@rajshaffir8665]

Longer than I’ve been alive, that’s for sure

[@zacht.9585]

I would love to hear them answer this question again today. I would think that the quality of a business plays a huge factor. For example: capital-light, higher margin businesses with higher revenue predictability (especially recurring), tend to warrant higher multiples. Buffett knows this well as he references Philip Fisher frequently. I think some SaaS businesses are arguably the best businesses in the world and are a big reason the average market P/E has increased over the last 25 years.

[@theWebWizrd]

Revenue predictability should warrant some higher P/E (more predictability = lower risk), though it's not obvious that 'SaaS'-style businesses are more predictable (their core services are typically in a hypercompetitive market where innovation is plentiful and new competitors with a great product can quickly make your business extint). I'd say more than anything, though, it is (the perception of) fast growth that pushes a higher P/E multiple. A P/E of 40 or even 30 and a resulting yield of 2.5%/3.3% will never be warranted without growth.

[@stockbasics3569]

Warren s the best

[@rickertcoles]

What is the best way to profit from the current market, meanwhile I'm still undecided about investing $400k in my stock portfolio to get some dvidends and minimize risk

[@Patatkevin]

Well the bigger the risk, the bigger the reward and such impeccable decisions are better guided by professionals.

[@GeorgeNN]

Very true. Despite having no prior investing knowledge, I started investing before the pandemic and pulled in a profit of approximately $950k that same year. In reality, all I was doing was getting professional advice.

[@laportafrank]

Pls who is this coach that guides you? I’m in dire need of one

[@GeorgeNN]

My financial advisor is Nicole Desiree Simon . I found her on a CNBC interview where she was featured and I reached out to her afterwards. She has long helped me with my portfolio and is exactly what you need right now.

[@laportafrank]

Thank you for the lead. I searched her up, and I have sent her an email. I hope she gets back to me soon.

[@kingiburu2778]

i have just started my journery with investing. My fathers a CA so hes helping me along this journey but I really appreciate this video. Im broke as hell and its been stressing me out about how im going to invest with so little money. This has boosted my confidence so thank you.

[@Who-cu9eu]

if a pe ratio is higher (16 and over imo) does the higher pe ratio correlate to a bigger market crash by any chance? I am referring to a total stock market crash, will high pe ratio stocks crash the worst?

[@MrTrap78]

I am no expert, but I would say that high P/E stocks generally have high risk. They tend to either do very well or very bad.

[@Who-cu9eu]

@@MrTrap78 well the higher the pe the higher the bubble so if that sector and i region crashes it will be much worse

[@dlwatib]

Depends on the reason for the crash. In the C-19 crash high P/E stocks generally were not hurt as bad, did not fall as far and recovered more quickly.

[@Oldbong]

@@dlwatib do you have any source or general research proving that conclusion? Not that I don't trust you, it would howwever save me from looking through all tickers

[@koenpostma912]

Yes high pe ratio stocks will crash harder than low pe stocks

[@tez830]

HERE IS THE KEY TO INVESTING

[@DenzelLN936]

Jesus the ads before and after are nearly longer than the content.

[@osandoval4584]

Get yourself premium youtube. Best investment you can make if you value your time.

[@binitoooo]

Get KZbin vanced. It's free. Only available for Android tho. Speaking of the comment above mine instead of wasting money on premium subscriptions get an android. Open source apps provide modded versions so no premium subscription anymore. Edit: forgot to mention that KZbin vanced blocks ads on Android. Or for the website version you can get adblock chrome extensions

[@vidya014]

PE/NETROIC = 1 PE is proportional to NetROIC. NETROIC is the effective driver for PE.

[@arts1902]

decreasing interest rates + increase in corporate proft (roe) of us businesses, +faith in american business. >> increase in p/e all around

[@pongfoong9523]

3d price it me cash around you making mo.for copy a part of all

[@pongfoong9523]

joecracker78 hey dept tor... how s going......

[@pongfoong9523]

Am just sa game...... dept tor.....

[@romulus7739]

why does Charlie look like a robot? lol

[@JamesToler]

🙌🙌🙌

[@viethuy903]

2:20 Buffett and his coke :)

[@nukefluke]

They remind me of Statler and Waldorf

[@wertytrewqa]

The questions at these shareholders meetings are so long. i wouldnt even have the attention span to answer them properly

[@tez830]

Short NFLX.

[@saidakhmeev8887]

T why

[@JMoney-ne3to]

Absolutely!

[@CIA_Is_aTerrorist_Orginization]

congrats

[@egor.okhterov]

These two guys never shorted anything and became billionaires

[@justwrapapi]

the market can stay irrational longer than you can stay solvent

[@Octovisuals]

Because it's relative.

[@apothe6]

Tesla

[@madmantrader]

buy apple or ulta beauty

[@habibbialikafe339]

U were wrong about ultra beauty

[@madmantrader]

@@habibbialikafe339 not at all the business is doing fine.

[@habibbialikafe339]

@@madmantrader 1% gains in 2 years with high drawdown and volatility. There are better businesses with better returns and less volatility out there

[@madmantrader]

@@habibbialikafe339 up almost 100% in 5 years that’s a good return

[@Fj8282haha]

Warren realized there is Carema looking at him at beginning so he unwillingly put down his hands searching for speaker lol😂😂😂

[@wahyuramadhan195]

😀😂😂😂

[@adityavishwkarma8745]

Can anyone explain it in Hindi... ?? Please

[@tahiranisar2853]

ÀRY berukhi

[@mrretired2715]

Its called tesla. If you are not invested on tesla before the next bull market then quit investing.

[@conors4430]

The questioner acting like he’s talking to God

[@danielkelly798]

He is lol

[@ronniedelahoussayechauvin6717]

There Ansers to questions Sounds So Stupid💯

[@johndeneen980]

They are over priced.

[@ronighosh8867]

Yes

[@pongfoong9523]

Hey ....dept tor....how 'ss going...

[@TheHellogs4444]

Are you high

[@pongfoong9523]

i know business have to belive all about humannibillity you have to belive your work and who r working to?

[@mrretired2715]

Charlie should just stay home

[@shaifullahfirhakim]

I want resignation

[@exoxy]

Do you now

[@pongfoong9523]

but you see my all album all free and never pay cash that i hope you care .i fect sis had to be my you know .if i didnt post you gonna blind .but i chin you peaking all bluebtooh free me free all

[@pongfoong9523]

post not unpost it doesnt mattar american you chin me allow you .but i fuck ing poor.coss think uncle bill know how to keep it free .

[@pranjayarora8115]

MASTER VISA -(GLOBAL BUSSINESS AVAILABLE IN INDIAN BANKS ALSO)30 PE PAST RETURN HIGH - BUT AMERICAN EXPRESS NATIONAL BUSSINESS PE 15 PAST RETURN LOW -ALL 3 OWNED BY BERKSHIRE HATHAWAY (2) HIGH PE HIGH GROWTH PROSPECT WHY PE RATIO OF ADANI GREEN HIGHER THAN ADANI POWER 💪⚡