When it comes to investing, you do your research, but you don’t always beat the market—which means you lose money.
Don’t fret. You’re definitely not alone—even the majority of highly-compensated hedge fund managers couldn’t match the returns of the S&P 500 in 2015.
Let’s face it: Without a crystal ball, predicting stock prices is tough. Despite the plethora of information available to investors on any given company, picking winners doesn’t happen often enough.
If you’re an active investor, you’re likely familiar with terms such as price-to-earnings ratios, beta, growth rate, etc.
But what about the P/E Gap method? This approach distills pertinent stock information into one number, which can make choosing the right stocks much easier.
Before we take a look at how this works, let’s review some stock-picking basics…