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This is very unfortunate because stock investing is one of the best avenues the average person has of accumulating substantial wealth. </P> <table width="100%" border="0" cellspacing="0" cellpadding="0"> <tr> <td> <table width="100%" border="0" cellspacing="0" cellpadding="0"> <tr class="text9pt"> <td width="50%" valign="top"> <table width="100%" border="0" cellspacing="0" cellpadding="3" class="darkgreyborderall" bgcolor="#ECECD9"> <tr> <td class="marketmythstext">MYTH #1: PRICE TO EARNINGS RATIOS TELL YOU WHETHER STOCKS ARE CHEAP OR EXPENSIVE. </td> </tr> </table> <img src="../images/5px.gif" width="100%" height="8" align="top">P/E ratios are easy to find. Just about every newspaper, magazine and stock report publishes P/E ratios. Everybody seems to talk about them when discussing stocks. So P/E ratios must be a great way to compare stocks. <br /> <br /> Right? Wrong! <br /> <br /> If you were told that Fly-By-Nite Industries had a P/E of 7, and Fantastic Plastics Inc. had a P/E of 14, would you buy Fly-By-Nite Industries instead of Fantastic Plastics Inc.? You might, but you wouldn t be comfortable making that decision. Why? Because you need more information. You d like to know a whole lot of things before you decide which stock to buy. One of the most important things you d like to know is the worth of each stock based upon its earnings, profitability and other key financial data. In other words, you d like to </td> <td valign="top"><img src="../images/5px.gif" width="15" height="8"></td> <td width="50%" valign="top"> have a sense of the stock s intrinsic value. P/E ratios don t say anything about a stock s value!<br /> <br /> What investors need is a Value to Price ratio. With a Value to Price ratio, investors would know immediately whether a stock was cheap, expensive or fairly priced. But this means we have to have a way of computing value. Of course there are theories and formulas for computing intrinsic value. But they are complex, and some sophisticated investors even say they are unfathomable. Consequently, most investors, even the Pros, don t begin to look at stock s intrinsic value! They resort to trivial devices like comparing P/E ratios.<img src="../images/5px.gif" width="100%" height="8" align="top"> <table width="100%" border="0" cellspacing="0" cellpadding="3" class="darkgreyborderall" bgcolor="#ECECD9"> <tr> <td class="marketmythstext">MYTH #2: YOU MUST ASSUME HIGH RISKS TO MAKE GOOD MONEY IN THE STOCK MARKET. </td> </tr> </table> <img src="../images/5px.gif" width="100%" height="8" align="top">A woman recently said to me, "I m just scared to death of stocks. I can t afford to lose my hard earned money." The perception of high risk in stock investing is</td> </tr> </table> </td> </tr> <tr> <td class="greyborderbottom"><img src="../images/5px.gif" width="9" height="12"></td> </tr> <tr> <td> <table width="100%" border="0" cellspacing="0" cellpadding="0"> <tr> <td width="75%" class="caption9pt">&quot;The Five Greatest Stock Market Myths &quot; p. 1 of 3 </td> <td align="right"> <table width="175" border="0" cellspacing="0" cellpadding="4"> <tr> <td><span class="caption8pt">Page</span></td> <td class="text8pt">&lt;</td> <td width="17"><span class="caption8pt">1</span></td> <td width="17"><a href="marketmyths2.htm" class="middlelink">2</a></td> <td width="17"><a href="marketmyths3.htm" class="middlelink">3</a></td> <td><a href="marketmyths2.htm" class="middlelink">&gt;</a></td> </tr> </table> </td> </tr> </table> </td> </tr> </table> </td> </tr> </table> </td> </tr> </table> </td> </tr> <tr> <td width="10" height="10"><img src="../images/5px.gif" width="10" height="10"></td> <td width="600"><img src="../images/5px.gif" width="10" height="10"></td> </tr> </table> </td> <td width="100%">&nbsp;</td> </tr> </table> </td> </tr> </table> </td> </tr> </table> </td> </tr> <tr valign="top"> <td class="greybordertopplusgradient" height="50"> <table width="100%" border="0" cellspacing="5" cellpadding="0"> <tr> <td><span class="disclaimerclass">©1996-2006 VectorVest Inc.</span> <a href="../disclaimer.htm" class="bottomlink">Legal Information</a> | <a href="../contactus.htm" class="bottomlink">Contact Us</a></td> </tr> <tr> <td> <a href="http://www.vectorvest.com" class="bottomlink">VectorVest Home</a> | <a href="../research.htm" class="bottomlink">Research</a> | <a href="../products.htm" class="bottomlink">Products</a> | <a href="/events/events.aspx" class="bottomlink">Training</a> | <a href="../support.htm" class="bottomlink">Support</a> </td> </tr> </table> </td> </tr> </table> </body> </html>