The saying goes, "You have to give up something to gain something."
After satisfying his psychological expectations, Carter's body paid the price for his mental pleasure. As the saying goes, "Feasting in the moment brings stomach pains later." That night, after returning home, Carter's stomach revolted.
Not to mention the pain, he also suffered from vomiting and diarrhea all night long (a true story, once he ate hot pot with a friend from Shanghai who couldn't eat spicy food at all, and immediately vomited afterwards), making Carter look particularly listless when he arrived at Kiddell Corporation the next day.
"Mr. Black, good morning! There's still half an hour before the market opens. Do you want to rest a little longer? You didn't seem to get enough rest last night."
Seeing Carter's listless look, Julian smiled ambiguously. Young and wealthy, even if he looked rough, he could still attract people's attention with his billions, especially since Carter was not only wealthy but also very handsome. Witnessing this scene, Julian wasn't surprised at all; he just kindly suggested that Carter should take a rest in the lounge.
"No need, it's perfect timing. There's still some time before the market opens. Let's see what stocks you have to recommend to me. Did you do your homework last night when you got home?"
When Carter sent Julian off last night, he mentioned inviting him to dinner to discuss money-making plans. Carter didn't believe that someone who had just finished a conversation with a big client and hadn't done any preparation would last long in the workplace. Besides, even without his suggestion, with six million dollars coming in, would he just sit on it?
"Of course, the companies listed on this sheet are all severely overvalued. Take this Vicestora Tractor Manufacturing Plant, for example. Don't be fooled by the name; in reality, this company manufactures tank chassis. Although the Vietnam War has ended, investors still believe that even without war, they can still produce tractors. With a large number of soldiers returning home after the war, there is bound to be an increase in demand for agricultural machinery. Therefore, after the war ended, their stock price not only did not drop but actually rose by five percentage points."
"But in the past four years, their profits have been declining. The P/E ratio is increasing, indicating a downward trend. It might crash at any time, so I've put it at the top of the list."
"Can you show me their profit reports for the past four years?"
Just by listening to the description, Carter also agreed with Julian's viewpoint. The rise in the company's stock price made sense logically, but whether to enter or not, Carter had to calculate it himself.
The advantage of listed companies is that their financial reports must be publicly available to all shareholders, so it's easy for others to check. Since Julian recommended the target to Carter, he must have been prepared. Immediately, he handed over a stack of detailed financial reports to Carter.
Carter couldn't understand the complex financial reports, but he knew simple arithmetic. After roughly dividing the company's four-year comprehensive net profit, he found that their annual profit growth rate was less than 8 percent.
It seemed like they were growing positively, but don't forget about inflation in recent years. An 8 percent annual profit growth rate probably wasn't faster than inflation!
It was more accurate to say it was negative growth rather than positive growth. Using the method learned from a friend who traded stocks in his past life, Carter calculated the PEG value of this tractor company and found that it was seriously overvalued.
The PEG ratio reached an exaggerated 3.4, which means that the company's market value has exceeded its own value by 3.4 times. Of course, this kind of algorithm is quite theoretical, but even so, Carter's operation attracted Julian's attention.
After staring at Carter for a long time, Julian suddenly asked, "Carter, do you know Peter Lynch?"
"Huh? What's that?"
Carter, who was calculating how much he should invest in short selling, was stunned by Julian's question.
"I mean Peter Lynch of the Magellan Fund, or do you know someone who knows them? Your algorithm is something Peter Lynch and his team particularly like to use. They use the P/E ratio divided by the profit growth rate to judge whether the company's market value is overvalued or undervalued."
"Really? That's a coincidence."
Carter awkwardly chuckled. As a financial novice compared to the investment celebrities of this era, he didn't know much. Besides Buffett, who likes to sell lunches, and Soros, the gambler, what else did he know?
Unconsciously, it seemed like he had copied something from a current big shot. He was even recognized directly by someone, which felt like when you traveled back to 2001, planning to plagiarize some poems, and someone immediately pointed out that it was a song by Jay Chou.
"Anyway, I'm very satisfied with your insight. Let's start with this one. Let's try to operate it first, or rather, you operate it, and let me learn."
"Are you sure about this one? Don't you want to look at other companies?"
Whose method it was didn't matter; it just had to be effective. The P/E ratio indicator was originally invented by Goldman Sachs, and later everyone used it. Julian didn't accuse Carter of plagiarizing someone else's intellectual achievements, he just readily provided his "bottom line" - 350,000 shares that could be directly mobilized. It accounted for 15.9 percent of the company's circulating shares. The information about the company issuing a total of 2.2 million circulating shares was also clearly stated on the list.
After roughly calculating, Carter understood the situation. Then, he gritted his teeth and decisively said, "Borrow it! This amount isn't enough. If we're going to do it, let's do it big. I want to borrow another 350,000 shares. Can you arrange that?"
"Borrow another 350,000 shares? That's 700,000 shares. Such a large batch of circulating shares being sold at once, I'm afraid... I'm afraid... the young can be ruthless, huh?"