Got a little confused with this one.

How the stocks are valued? By taking into account the trailing P/E or
the F P/E???

Thanks for your answer in advance.

Simply put, the more people who want it, the higher it goes...the
opposite is also true. The more people trying to unload it, the lower
it goes.

Stock price really is as simple as that.
How I would would price a stock includes a mess of factors. I often
consider the PEG (forward growth), but right now, MSFT is difficult to
value because of the YHOO speculation.

Yes, but what about the F P/E??

If I calculate the MSFT price of 29.70 comes when I take into account
the P/E (trailing) and the trailing EPS.

If thats the case, whats the use of F P/E?

And what does it mean the if the F P/E is more than the trailing PE,
can you be bullish on that stock( as you see that the F P/E figures
are better then the P/E??)
This may not be the case with MSFT atleast for now, but in general, is
F P/E a good indicator for the future uptrend or downtrend??

Comments?

the lower the F P/E, the more future growth there is because it's
taking the current price dividing it by the future earning. higher
earnings would traslate to a smaller F P/E.

Thanks Ben...

So whats the conclusion here???

If the P/E is say for example 28 and the F P/E is 20.

What shall I read in those numbers???

Am i supposed to be bullish as F P/E is less then P/E or am I am
supposed to be bearish as I see the forward P/E going down???

Damn, why I am getting so confused on such a small thing....

Don't worry.  Those numbers are incorrect anyway.  Especially the
Outstanding and Inst. Own #'s.

Learn to analyze the ticker because those numbers, F P/E, are derived
from Analysts.  When you're in a blue chip stock like MSFT, ignore the
news and even analysts Buy/Sell ratings.

Instead, watch the BIG Fish, aka Fund Managers (If you can't day trade
with $10million you're a SMALL Fish).

Example: Yesterday they shorted and bough 5 million @ 29.07 on the
close.  If they didn't turn a profit in after/pre market, the price
will go up from Regular Investors, and the Managers will short when
the reach thier goal.  So what do you do?

Look at the News.  A big sale that is followed by good news is BAD.
(They're trying to drum up volume and then unload more shares)
A big sale that is followed by bad news is GOOD. (They're testing the
fear/greed variance; sometimes they will leave the stock alone for a
few days to a week, and let the price drop from fear selling b/c of
low volume.

Never stray from the big picture or trust the news.  Even if the News
company is legit, the company reserves the right to restate financials
for up to a year!!! (MSFT could announce tomorrow that they made a
mistake in Accounting back in '07)

Analyzing Stock Tickers and Graphs is your best bet (Too see if big
fish were selling or buying).  Why rely on Analysts that lie (Most are
being arrested, or in Affidavit of Probable Cause (Grand Jury Felony
hearing))

If big fish are buying, which drums the price up, and selling/leaving
it alone, that's a good sign.  They are wanting more shares, but at a
reasonable price.  If you just keep buying millions of shares, the
price sky rockets.

If all kinds of great news is being released and the price is going
up, look at the graphs.  If 5million shares are suddenly sold, the
Managers are unloading Stocks.  If you just keep selling, the price
bottoms and people freak.

It's early, so if this is hard to read or is not clear, just reply

Analogy that might help:

Unloading:
You own a big Pot of M&M's but you were informed chocolate causes
cancer.  No bad news is released so a Big Institution can unload their
shares first (Financial Institutions control the world, and the
majority of Business and Consumers owe something to Financial
Institutions).  That way when 1 mil. shares are sold at a time, most
idiots don't realize what's going on.  They're just following Analysts
Ratings and News.  So I get the company, and/or news, to release good
news (higher EPS, expected growth, inked deals, etc)  and I start
unloading.  If I just started selling without releasing good news to
drum up volume, I'm stuck with worthless M&M's.

Buying:
You only have 10mil M&M's and there is 10 mil outstanding.  If you
start buying millions of shares, the price will sky rocket.  So, you
sell some of you're M&M's and leave the stock alone and observe.  The
fear factor from the huge sale will drive the price down if there are
panicing traders.  It only takes 1 share sold @ x amount, to make the
new Low/High that X amount.  It should now be obvious that fear can be
smelled and will mess up a stock price. I have yet to see a stock that
didn't have fear( especially with three weeks of low volume; some had
three months and lost 60% b/c of panicing day traders.)
After the price goes down/levels off, you buy more shares and let the
stock rally and short; or you leave the stock and come back after fear
has taken it's toll on the price, and buy more.  After awhile (Big
fish have deep pockets and no time limit) the Institutions gain 8mil
of the 10mil outsanding.   The stock price, the next day, is basically
whatever they want it to be. Supply & Demand.

Keep it simple and never go on F/PE, etc.  That's estimated, by
Ignorant or crooked Analysts, and the numbers are rarely updated on
Google.  Always look at the historical ticker totals and Interactive
Graphs.

Do you have Active Trader, or some other program?  Google's graphs are
not as accurate or as easy to read as professional ones.

Thanks Pette for your insight into Fund managers buying/unloading
tactics... that was very helpful.
I use Metastock - End of the day software for my stock research for
Technical analysis. Its a neat tool.

At the same time, I also try and look at the fundamentals. Hence this
question came up.
But I still needed the answer from a fundamental perspective.

A better example for this purpose could be Baidu.

Stock price around $360.

PE around 126.6

F P/E around 57.50

I took this example becuase the difference in PE and F P/E is quite a
lot.

So, today Baidu is trading at 126 PE which is INSANELY EXPENSIVE but
its F P/E suggests that if the earning estimates are even a ballpark
figures to go by, the future PE to the current price is around 57.

So should an investor skip Baidu because its trading at a very high PE
or should he/she take a close look as the F P/E which seems
comparatively cheap to the P/E?

I am aware, PE is not the only metrics used for fundamental analysis,
but nonetheless its the starting point of any further analysis if
investors find something interesting in those P/E, F P/E figures.

Hope I have made myself more clear this time as too what I am looking
for.

Wonderful post.  Thanks for the insight.  I use active trader but am
not sure how I can find if the big guys are buying and selling?
Looking at the Level IIs shows me the bids/asks and volume but I can
not watch that all day.  For MSFT I have been seeing larger buys and
sells for maybe 10K to 50K but nothing more.

santosh, i think the question you are asking about F P/E has a lot to
do with the context of the market, sector, and particular company. in
the case of Baidu it should be obvious - everyone expects that thing
to have big long-term growth potential, so the current price versus
expected future earnings is of course much cheaper than versus current
earnings. so in this case a much lower F P/E is a great thing - it
just reinforces (and is actually just another view on) the growth
potential for that stock over the long term. In the case of MSFT, it's
probably a bit more complex than that. There are a lot of pessimists
on MSFT due to flat growth over previous years, a not-so-shareholder-
friendly CEO, flawed acquisition strategies, massive cash holdings,
etc. - so F P/E with MSFT needs to be taken with a grain of salt, and
you can't simply look at it and say "well we are even cheaper if you
compare to future earnings".

frankly at current levels, MSFT is cheap at whichever P/E you look at
- so it doesn't matter, as long as you consider this a medium-long-
term investment. on the other hand, i'm not so sure it is a solid long-
term investment right now.

but in general a lower F P/E than current P/E is a good thing - it
indicates good growth expectations for the stock, and means that if
you are a long-term investor the stock is cheap relative to what you
will earn on it in the future. a decent long-term strategy could be to
go through a list of stocks regularly and compare P/E to F P/E, and
prioritize the ones that are cheapest now, by this measure.

Thanks Glaze for that neat posting.
I am getting better with these P/E and F P/Es.

Thanks a ton.