HyperPumper, what are the P/E and the PEG ratios?

The P/E ratio is the per share stock price, P, divided by the per share earnings, E.� Some fools -- there's no economic rational behind this -- believe the P/E ratio should be roughly g, the growth rate.� Thus, if YHOO (for instance) were to grow at 50% per year, then YHOO's P/E ratio should be 50.� (Hmmmm... this seems a tad low!)� In any case, if you believe this, then
� P/E = g�
or equivalently
� P/(E*g) = 1.��
Thus, these fools define PEG = P/(E*g) and go around calculating good old peggie.� If PEG > 1, they say a stock is "overvalued."� If PEG = 1, they say "Told ya so: PEG equals 1."� If PEG < 1, they say "Eureka!! We found an undervalued stock.� Strong Buy!!!"��
HyperPumper does not think it is wise to pick stocks based on crude benchmarks like P/E ratios or Peggie.� HyperPumper has done well picking stocks based on the potential of the underlying company and its underlying industry.� Go with the blue chips in hypergrowth networked industries like Internet media, commerce, and infrastructure.� Have you ever met a poor Internet CEO?�