I think many of you at one point of time got bothered by this question, especially after getting regular drips of "Free Knowledge" from sundry TV-experts, who belch out in full glee in front of cameras. Even today, I heard a marketman in a business channel giving a buy Call on Ashok Leyland Ltd (Rs.56.55), which has a P/E of 60.16. Do you know what P/E of 60 means? It means it will take 60 long years of the company’s earnings, proceeding at the current rate, to add up to the original purchase price. How many of you will live so long? And hold your breadth the entire P/E of the auto sector is 303.86 or more than three centuries. But Chartists continue to play with the sentiments of gullible investors / traders in front of TV-Cameras, for reasons best known to all; while the regulator looks at the other way.
- Ojas Asset Reconstruction Company (CMP: Rs.555, Book Value: 9.52),
- Gold Line International Finvest (CMP: Rs.495.10, Book Value: Rs.10.02),
- ICVL Chemicals (CMP: Rs.163.70. Book Value: Re.1),
- Kelvin Fincap Ltd (CMP: Rs.428.95, Book Value: Re.0.01),
- Omega Interactive Technologies Ltd (CMP: Rs.83.05, Book Value: Rs.14.63),
- Mapro Industries Ltd (CMP: Rs.403.90, Book Value: Rs.10.83),
- Universal Credit and Securities (CMP: 294.80, Book Value: Rs.5.66)
- CCL International Ltd (CMP: Rs.491.35, Book Value: Rs.3.75)
- Intellivate Capital Ventures (CMP: Rs.52.60, Book Value: Rs.1.70)
- Zodiac Ventures (CMP: Rs.88.75, Book Value: Rs.3.08) and so on......
Moreover, mushrooming growth of "Chartists" who have a fancy name "Technical Analyst", is really a cause of alarm for the investor community. Some of these "Chartists" are the real nuisance, whom everyone should avoid.
Also, there is nothing called Valuation in share market!! Of course what we generally understand by valuation is "Public Market Valuation", which is calculated in most of the cases using Discounted Cash Flow method. But all these are of academic importance as there is no guarantee if the balance sheet presented by the company is manipulated or not. If there is ghost in medicines, then how to cure the diseases.