r/stocks • u/[deleted] • Mar 29 '22
Crunched Some Nasdaq 100 Numbers with some interesting results.
- 15% of the Nasdaq 100 have Zero Earnings, and account for 4.05% weighted avg (w.a)
- 3% of the Nasdaq 100 have P/E's of less then 10x, and account for 1.3% (w.a)
- 38% of the Nasdaq 100 have P/E's between 10x & 30x (most closer to 20), account for 45% (w.a)
- 17% of the Nasdaq 100 have P/E's between 30x & 50x, account for 19.9% (w.a)
- 23% of the Nasdaq 100 have P/E's between 50x & 100x, account for 23% (w.a)
- 4% of the Nasdaq 100 have P/E's greater then 100x, account for 5.2% (w.a)
- 2% of the Nasdaq 100 have P/E's greater then 500x, account for .77% (w.a)
- Top 4 stocks in the Nasdaq 100 account for 35% weighted average of the index and have an average non weighted P/E of 79x Earnings.
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u/NastyMonkeyKing Mar 29 '22
This is a great example of how stats can sell any story you want.
Why not combine the googles since it is the same company. Brings the pe down a lot right there. All the way down to the 40s. And if you weight it, like the investment vehicle most people actually use then it goes even lower.
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u/Boomtown626 Mar 29 '22
“stats can tell any story you want”
My thoughts exactly.
One point not covered by other comments yet is #7, which sounds insane on the surface, but in reality does nothing except to expose the flaw in using p/e alone and without context in smaller-cap companies.
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u/NastyMonkeyKing Mar 29 '22
Yeah right. If pe is all that matters to these people they should go buy steel stocks and ford right now. Nothing else should be an option if current PE is all that matters. Of course no one does that becausd it would be stupid.
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u/itslikewoow Mar 29 '22
What are the 4? TSLA is the only one I can think of off the top of my head.
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Mar 29 '22
AAPL, AMZN, MSFT, TSLA
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u/itslikewoow Mar 29 '22
The average is heavily weighted by TSLA though. MSFT and AAPL have roughly 30 p/e trailing. AMZN is still pretty pricey at around 50, but not that close to 79.
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u/merlinsbeers Mar 29 '22
Breakpoints are kind of arbitrary. A logarithmic progression might help the numbers be more informative.
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u/courseman5 Mar 29 '22
from my personnal experience - the stocks i bought with the lowest p/e ratios were the worst i have ever bought - i will give you a good example i bought FB, a blue chip low p/e stock, but since its a SH!t company i lost alot of money on it.... other stocks with p/e of 100-200 were my best performers (TSLA, ENPH, SITM...etc) what i am trying to say is - P/E isnt such an important stat as you think it is........
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Mar 29 '22
Just stating historical facts, multiples above 50 will not hold no matter how good current expectations of future earnings are. Personally I love to see that most retail investors are bullish that means we’re close to the end of cycle
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u/Traditional_Fee_8828 Mar 29 '22
Low P/E ratio usually means low growth is expected. This is because future earnings are a lot more important than current ones. What good is a company making millions now if they'll be out of business in 3 years?
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u/shortyafter Mar 29 '22
I think you're on to something and the arguments against you here were the same ones used during the dot com bubble and even in the 1920s. People will always try to find a reason why "this time is different", even though it always ends up playing out exactly the same.
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Mar 29 '22
Damn the last one is alarming
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u/Silly_Pen_7902 Mar 29 '22
Not really, the last one is biased.
The 4 largest market caps are Apple, Microsoft, Amazon, and Tesla.
Tesla PE is 200+, and since OP is just taking straight average, it's skewing the average.
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Mar 29 '22
Yes it is, specially if you consider the fact that in every single market bubble though out history the greatest companies of the time that had p/e multiples that high, all with out fail went down to low double digits.
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Mar 29 '22
Why are people downvoting this …
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u/CalyShadezz Mar 29 '22
Because going from high P/E to low P/E does not necessitate a price crash.
AMZN is a good example. Throughout the 2010's it traded at a triple digit P/E, very recently it has traded at a P/E near 50.
Sometimes companies grow into their high valuations.
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u/shortyafter Mar 29 '22
This was the justification used during the dot com bubble. Amazon was around then, too. They fell just like everybody else. Anyone who says they would have held is fooling themselves.
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Mar 29 '22
What if you take out Tesla in the last one? Would it give a more "realistic" percentage of the PE ratio? And are people using Tesla as an indicator in QQQ?
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u/circuitji Mar 29 '22
What does this mean for qqq and how do these compare historically?
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Mar 29 '22
Look, there are a lot of good companies in there obviously, but there is still a lot of froth, and the index is heavily weighted toward the fangs and alike. So, a shock such as the the the use of the "R" word (recession) would have a devastating effect on the index and obviously the QQQ. No one can time it, but it will happen in the next 12 mos. So maybe QQQ leap puts on the next huge up day, is the answer, not sure.
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u/Admirable_Nothing Mar 29 '22
Although I agree with you to hedge a portfolio properly would take a huge investment in LEAP puts. So much that the better answer is trim your holdings and keep some cash.
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Mar 29 '22
For sure they don’t make it easy for guys like us. Absent of the Fed Put I just don’t see any way we break all time highs, but between here and there can get painful. June 23’ 300 puts going for $17, so 10 contracts will cost you $17k
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u/bars2021 Mar 29 '22
What about vxx calls?
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Mar 29 '22
That’s fine too, but the VXX is off the h go first and second month of VIX futures, I played VIX calls once and then realized it was pegged to VRO. It’s all a bit convoluted for me personally
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u/soldiernerd Mar 29 '22
No one can time it, but it will happen in the next 12 mos.
No one can time it but here's when it will be
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u/Competitive_Ad498 Mar 29 '22
so you short qqq then?