Making money in the stock market is easy, in theory at least. Just buy cheap shares, and be patient. Plenty of studies show that value investing – buying shares for less than shares are ‘worth’ – produces superior returns to most other stock-picking methods.
It might not make you rich overnight, but do it for long enough and you should beat the market healthily.
But how do you find cheap shares?
That’s where it gets tricky. Most investors start with the price/earnings ratio (p/e). It’s simple to calculate (just the company’s share price divided by [...]