The stock market is not like your typical everyday Supermarket but it’s still a market. It’s just that unlike the supermarket prices are more volatile and the product either increases in value or decreases. Another similarity too is that prices in Supermarkets and the Stock market can be expensive or cheap depending what you are buying.
Many don’t view the stock market this way which I find strange. Stocks which you liken to products in the supermarket can be expensive. An expensive stock is not about the share price you pay for it but how much that price is worth relative to the earnings the stock is generating. This concept is called Price Earnings ratio and its one of the quickest metrics investors use in deciding whether to buy a short.
I’ve taken a look at a cross section of blue chip stocks quoted on the Nigerian stock exchange and these below are the priciest stocks you can find based on P.E ratios.
So next time you decide to put any of these stocks in your portfolio always remember they are expense and investors pace a high value on them because of their future growth expectations. The moment they suffer any stunted growth their share price will go South. If I had the stocks in my portfolio at these prices id be holding to sell on the short term. But then that’s me and my stingy ways.