Brian Feroldi Joins Us to Give Us 8 Reasons the P/E Ratio Sucks

Welcome to the Investing for Beginners podcast! In today’s episode, we will have Brian Feroldi joining us in a first time ever live show here in Cincinnati’s economy fire conference. He will discuss the price to earnings ratio which is the most common and known metric in the investing world. Listen on as he talks why solely using the p/e ratio can be bad and when is it useful to be used on.

Timestamps of the episode:

-Why the price to earnings ratio alone is a bad metric. [01:45]

-The different flavors of the P/E ratio with the focus on how the “E” is structured. [04:15]

-How the earnings of a company can be misleading which makes the P/E ratio wrong. [07:08]

-First reason why a P/E ratio can be misleading: Accrual accounting. [08:12]

-Walking back to the overview and relationships of the three financial statements. [11:05]

-Second reason: Equity investments will either deflate or inflate earnings [13:50]

-Third reason: One time events are mirages and won’t happen often. [16:55]

-Fourth reason: Unsustainable trends work like boom and bust cycles. [19:58]

-Cyclical demand is hard to predict and can be counter-intuitive. [21:27]

-Industry dynamics will dictate how a business really earns. [24:42]

-Fifth reason: Disruption, knowing this is next to impossible as we live in the most disruptive periods in human history due to fast paced tech innovations. [26:42]

-Eight reason: Knowing which phase a company’s business growth cycle can be a hit or miss. [29:00]

-The most important thing in using the P/E ratio. [34:56]

Note: Timestamps may differ and are approximate, depending on your podcast player.

Link to Brian’s website-

Today’s show is sponsored by Rent to Retirement

Rent To retirement offers fully turnkey properties that are newly built or renovated, leased & professionally managed, allowing you to invest with confidence out of state. They have single family, multi-family, new build & syndication opportunities across multiple markets. Rent To Retirement assists investors in learning how to build a comprehensive business plan with the best investment & tax strategies to achieve financial freedom through real estate investing!

To learn more, visit That’s Rent T-O Or call 800.311.6781 that’s 800.311.6781 to learn more about how you can get started investing in some of the best cash flow markets today

Today’s show is brought to you by Shopify:

Shopify is the commerce platform revolutionizing millions of businesses worldwide. Whether you’re selling children’s books or hand made bracelets, Shopify simplifies selling online and in-person so you can focus on successfully growing your business. This is possibility powered by Shopify. Sign up for a one-dollar-per-month trial period at SHOPIFY DOT COM SLASH “beginners”, Go to SHOPIFY DOT COM SLASH “beginners” to take your business to the next level today.

For more insight like this into investing and stock selection for beginners, visit 

To help grow the show, please consider filling out this survey to give us better insights into our listeners preferences, thank you!


Apple | Spotify | Google | Stitcher | Tunein

You can find the transcript of today’s show below:

Contact [email protected] to advertise on Investing for Beginners podcast. The Investing for Beginners podcast is part of the Airwave Media podcast network.

Learn the art of investing in 30 minutes

Join over 45k+ readers and instantly download the free ebook: 7 Steps to Understanding the Stock Market.

WordPress management provided by