As there is always the chance of going wrong in the market, caution and a long-term perspective should be your watchwords. But there are times when caution – thinking before deciding – becomes even more important. We are in those times. Reason: While short-term selling pressure might have reduced, the possibility of headwinds is high – from the slowdown in the economy to global level issues becoming a reality. In such times, give some importance to value. Now, one of the most used – or should one say unknowingly misused – ratios is the price-to-earning or PE ratio. At a time the market is adjusting to the Q2 earning season, relying on this ratio could lead to more wrong decisions than right. A better option is the PEG ratio. It is tougher to calculate as it has an element of projection – but it gives a better idea of the health of a company.
