"Do not mistake investing for science" Why smart retail investors get trapped in this winter’s downturn (Economic commentator Yoon Ji-ho) [Filmed 26.11.10]

An independent exercise, not a statement by the video creator or verification of every claim in the video.

A lower share price can still mean a higher P/E

Suppose a hypothetical share price is 100 and annual EPS is 10, giving a P/E of 10. Reducing the next period’s EPS assumption to 5 makes the P/E 20 at the same price. Even if the price falls to 80, EPS of 5 gives a P/E of 16. With both price and earnings declining, the price can be lower while the multiple is higher than initially. For an actual comparison, do not mix reported and forecast EPS; align the period and share-count basis.

Check for yourself

1. What evidence distinguishes an EPS decline caused by temporary inventory adjustment from lasting margin impairment?
2. If semiconductor volumes rise while prices and margins fall, what conditions are needed to sustain profit?

Limits of application

The hypothetical figures do not establish a fair P/E or current business value. Loss-making EPS, one-off items and substantial changes in share counts can alter the meaning of a simple multiple. The linked historical loss does not predict the scale or recovery timing of the current cycle.