Market's Price (Per Share) /Net Income (Per Share) The p/e ratio of one successful company may be very dif- ferent from that of another successful company if the two companies are in different industries. For example, high- tech companies with big growth and high earnings gen- The Qualified Investor 263 erally sell at much higher p/es than low-tech or mature companies where growth has stabilized. Just look at the stocks being sold in Internet companies today: Many of them are selling at very high prices even when the com- panies have no earnings. The high prices in these cases reflect the market's expectation for high earnings in the future. The Future p/e Is the Key A qualified investor recognizes that the current p/e is not as important as the future p/e. The investor wants to invest in a company where the company's financial future is strong. In order for the p/e ratio to be helpful to the in- vestor, much more information about the company may be needed. Generally, the investor will compare a com- pany's ratios for the current year with that of previous years to measure the growth of the company. The investor will also compare the company's ratios with those of other companies in the same industry. Not All Day Traders Are Qualified Many people today are participating in "day trading," which has become popular due to the convenience and availability of online trading. The day trader is hoping to earn profits through buying and selling securities within a single day. The day trader is very familiar with p/e ratios. What distinguishes a successful day trader from an unsuc- cessful day trader is often his or her ability to see behind the p/e ratio. For the most part, successful day traders have taken the time to learn the basics of technical or funda- mental trading. Day traders without proper financial edu- cation and financial analysis skills are operating more like gamblers than traders. Only the most educated and successful day traders would be considered qualified investors. 264 Rich Dad's Guide to Investing In fact, it has been said that the majority of new day traders lose some or all of their capital and quit trading within two years. Day trading is an extremely competitive S quadrant activity in which the most knowledgeable and best pre- pared use everyone else's money. Remember to get your free audio report "My Rich Dad said, 'Profit Don't Panic,'" available at www.richdadbook 3,com, Learning how to keep a cool head and invest wisely during a crash is a very important qualified investor skill. Besides, it is during a crash that many people become very rich.