Of prophets and profits

摘要

In a witty new advertisement for Charles Schwab, a stockbroking firm, no less a market guru than Sarah Ferguson, the Duchess of York, warns a young princess of the need to understand the "difference between a p/e ratio and a dividend yield". Not long ago, the phrase "price/earnings ratio" and its abbreviation were part of the secret language of professional investors. Now, thanks to the transformation of share trading into America's national pastime, the p/e—the ratio of a company's share price to its profits (ie, earnings) per share—has become part of the vernacular.