Clients who use this ratio may end up flocking to a manager who earns a relatively modest return with very low volatility.
ECONOMIST: Smooth returns can be a sign of danger for investors
If we use the ratio from the last quarter, it implies Amazon has sold around 22 million Kindle books so far this year.
FORBES: How Many Kindle Books Has Amazon Sold? About 22 Million This Year
That led to the widespread use of the Sharpe ratio as a measurement tool.
ECONOMIST: Smooth returns can be a sign of danger for investors
Portfolio managers often use the eponymous Sharpe ratio to determine how much excess return they are producing per unit of risk.
FORBES: Are You Making Something Usable? Part 6 -- How to do it.
Because the company is unprofitable, the price-to-earnings ratio is of no use here.
The CAPE model can be seen to use a long-term average ratio is calculated using market data back to 1880.
FORBES: CAPE Advocats Say Equities Overvalued...They Are Wrong.
Use multiple valuation metrics--not just the ratio of price-to-earnings but the ratios of price-to-sales and price-to-book.
Before the use of dollars was made legal in 1993, the ratio between the highest and lowest salary was just five to one.
While DBA is a fine fund, the use of futures contracts runs up expenses and the expense ratio here is 0.85%, a tad high.
Instead, he says, investors should use this formula: Divide a mutual fund's upside-capture ratio by the downside ratio.
Many use a dividend discount model, but I prefer the straight price-earnings ratio yardstick.
LinkedIn: LinkedIn reports an even ratio of men and women 49% who use the site to connect with other business professionals.
He had worked out a ratio between the amount he was looking after and the amount that people wanted to use at any moment.
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