For the PE ratio, is it lower PE ratio show that the stock is undervalued and good to buy? Anybody can teach about PE ratio here?

The cheaper PE means stock is less expensive.

To simplify,

PE of 20 = 5%
8 = 12.5%
10 = 10%
30 = 3.3%
50 = 2%

So that mean if the company profit is constant in the future with PE 20, that mean it will earn 5% per annum to the shareholders. But sometimes don't be fooled by low PE since the published PE in the newspaper since it is based on past year result.
The most important is the future PE, how the company will perform in next 1-2 years, generally buying share mean that you are buying the company future 1-2 years time ahead.
Some company with low PE got its reason behind, may be the company future is not bright and profit will deteoriate which mean future PE will become higher or the past year result is too good (bring down the PE) which is boost by some extra-ordinary gain by selling property etc rather generated from the core business. But next year without the extra ordinary gain, its profit will become lower.
Growth stock generally has higher PE since the profit level is expected to increase.

Long stories, just a brief explanation. But if a company prospect is good and PE ratio is low relative to interest rate or share price is below NTA then generally it can be classified as undervalued or cheap.

The PE valuation is a relative to interest rate and bond rate. The PE needs to be lower than the interest rate can offer in order to justify the risk you take in the stock market. Otherwise it is not worthwhile to invest in high risk stock market, so that's come the expensive definition to the stock. For KLSE the average PE is 15 for 2007 estimated earning which is fair, not cheap also not expensive. If it shoot past 20 then it is considered expensive since only 5% return rate which is below the USD interest rate currently offering.
Overall the world market is trading in the range of 10-20 of PE ratio.

I hate the way the market goes up today.... tomorrow get ready for profit taking. Shares going up as if they all struck goldmine yesterday.

Yup, shoot up don't need any reason at all.

TM reported poor 3Q with profit declining 30+% still shoot up 50 cents today, puzzling, I don't know how analysts will comment on it. Bright future?
While Sime Darby take over price is at about RM6.50 still people want to buy at RM6.80, no make sense.

Market is always like that, when goes up time, any news also won't bother, momentum carry on. Market down time, any news is also a bad news.

how true that statement is....

I remembered way back in 1992, sitting in the trading hall of a stock broking house, this one fler will come in and tell us, hey... this company got news!! then you see the whole jin gang will start intercomming their remisier to buy without knowing what the news is...it is "expected" to be good. sigh...

Government linked companies (GLC) also tend to have higher PE..

This is from Peter Lynch's "One UP The street" book.

The formula that he use to determine whether a stock is cheap or not.

(Dividend Yield + Long term growth rate)
----------------------------------------------------
(P/E)

= 1 bad
>= 1.5 good
> 2 Bargain

Dreamer

market will target 1150 index end of this month
so enjoy

add on:
Low PE does mean the low is undervalue! But need to check whether the earning drive the low PE is mostly due to increased of the sales & margin, & not the extraordinary item like adjustment of account!

In the bull market, low PE stock may attract more buyer due to "still cheap", like MASTEEL...valuation PE only 6! Real low, & the room for growing up is high!

is the minimum Brokerage Rate for online trading also RM12/transaction?

Yes, the lowest is RM12 no matter you buy 1 lot only with the stock is RM0.01,

If you buy 1 lot RM0.01, it only cost you RM1 but the brokerage is already RM12, sound funny, isn't it. That's why you see volume is quite high for those penny stock due to economical reason in trading/speculating.

Brokerage rate = value x 0.42% (Minimum RM12)
Stamp Duty = value x 0.1% (Round up)
Clearing Fee = value x 0.04%


Example 1:
Buy 1000 shares of ABC at RM5.00/share

Commission = 0.42% * 1000 * 5.00 = RM21.00
Stamp Duty = 0.1% * 1000 * 5.00 = RM5.00
Clearing Fee = 0.04% * 1000 * 5.00 = RM2.00
Transaction Costs = RM21.00+RM5.00+RM2.00 = RM28.00
Net Value = RM5000.00 + RM28.00 = RM5028.00


Example 2:
Buy 1000 shares of XYZ at RM0.25/share

Commission = 0.42% * 1000 * 0.25 = RM1.05 = RM12.00 (Min)
Stamp Duty = 0.1% * 1000 * 0.25 = RM0.25 = RM1.00 (Round up)
Clearing Fee = 0.04% * 1000 * 0.25 = RM0.10
Transaction Costs = RM12.00 + RM1.00 + RM0.10 = RM13.10
Net Value = RM250.00 + RM13.10 = RM263.10


if your transaction value is lower than RM2857.15, then you are paying more than 0.42%

This post has been edited by lipkhin: Dec 2 2006, 01:06 PM

U know something? That's the very same basis where those stock scam spam r based on.

This is so called the manipulator strategy...rumours spreading! If the price still up a bit or not yer move, we can consider the tip! If the price already went up more than 50%...let let it go...the risk is higher than what is ur expected return!!!

Trade using online also can play contra?? How much money do i need to put in to play contra?

Playing contra means that no money involved, you gain or loss without any capital as long as you sell your shares before the T+3 settlement day than you don't need to pay a single cents.

Trade online or through remiser is no different, just some offer better discount rate on brokerage fee (most at 0.42%) to promote customer using the online service.

today's market those heavy weights still do not rise high enough
but their call warrants already trading crazily..

normally CA is like the "future" to tell the stock going to up to this amount!

Hi im new to the share market.. I notice there is this thing call CA and CB and WA etc.. can any1 explain? thanks..

CA/CB is call warrant that issued by third party rather than the company itself while WA is the warrant issued by the company itself. Check their conversion price according and expired time which is the crucial information when investing in warrants.

FYI, plenty of the high volume warrants being 'goreng' to not realistic price currently, be careful, especially those expiration date is less than a year. A lot of of warrants still 'out of money' mean that not worth a single cent if its mother share still remains at current price when the warrant expired.