Warren Buffett: Should You Invest in a Stock With a High P/E Ratio?

Warren Buffett talks about investing in stocks with high Price to earnings (P/E) ratios. Buffett is the CEO of Berkshire Hathaway and is considered by many to be the greatest investor of all time. This question is from the 1998 Berkshire Hathaway Annual Meeting.

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[nomcognom]

Remember, guys: a good company is not always a good investment, it depends on the price you pay for it.

[Octovisuals]

P/E is relative and just another metric to compare and get a quick idea. But if it's because of real growth, it's acceptable while it's not very high. If it's just hype, then you are taking too much risk.

[shubhamchoudhary]

I loved the fact how Charlie's interestingly very uninterested in what buffet has to say 😂😂

[WeideMarket]

I like it! You get paid just as well the simple dive as long as you execute it well! Don't make it so complicated, keep it simple and go for the high probability of return

[metamatata]

I look for prospective pending acquisitions and/or talk of foreign partnerships/expansion for a fair share price or ipo

[harikrishnanchandramohan]

@Investor center: Why do investors think PE is important when it has got zero correlation with your outcome. For example, American Express trades a multiple of 15 with trailing 5year return of 48%. Whereas Mastercard, trades at a multiple of 37 with trailing 5year return of 126%. At the end of the day, my 100 dollars in American Express becomes 148 and the same becomes 226 with Mastercard. So who cares if I overpaid or got less ownership of the company. Correct me if I am wrong. What am I missing here?

[hardy]

Well the challenge is to buy low p/e that become high p/e in short to medium term.

[binaryvat]

PE ratio goes up with price increase, but even more with Earnings decrease. I prefer to watch price and earnings separately.

[TylerSinden]

Warren the goat. This is really good to know as Tesla's P/E so high.

[hardy]

The challenge with the simple dive is you don't dive in shallow waters and hit your head on the floor.

[ggg-xsqx]

Confirmed: Charlie sips his coke about once a minute.

[ramoncastillo]

BUFFED AND CHARLIE BOUGHT AMAZON AT P/E 78 LOL

[evilblood]

Don''t i wanna invest in stocks with low Price to earning ratio? The more money is earned on every dollar invested the better i.e. low p/e... no?

[MaryPatricia-wrwj]

The collapse of Margin debt leads to a decrease in stock prices and trigger a wave of selling as investors try to cover their losses, Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. Hence what are the best stocks to buy now or put on a watchlist? I’ve been trying to grow my portfolio of $145K for sometime now, my major challenge is not knowing the best entry and exit strategies ... I would greatly appreciate any suggestions

[Pwong]

Sorry I’m not sure I get the message right, does this imply why searching for a high P/E stock when a low PE ratio stock has same earnings prospects as high PE stocks?

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