I don't know where to post this question, I hope it's ok here.

I have just finished reading Cramer's book and have a question regarding the Multiple (P/E ratio). I understand how to calculate it, but I don't get how you figure out if it is too high, low or just where it should be. If you have a company with good financials, and a certain P/E, how do you evaluate what to do next?

Also, when trading an IPO, how do you decide when to get out. For example, last week I bought IRBT, the same day it went up 3 points, the next day it went up another 2. Yesterday it lost about 3.5. Obviously I should have gotten out sooner. But how could I have known? What should I have looked for? I know IPOs are speculative, but what do you guys do?

Thanks, Tom

I don't know where to post this question, I hope it's ok here.

I have just finished reading Cramer's book and have a question regarding the Multiple (P/E ratio). I understand how to calculate it, but I don't get how you figure out if it is too high, low or just where it should be. If you have a company with good financials, and a certain P/E, how do you evaluate what to do next?

Also, when trading an IPO, how do you decide when to get out. For example, last week I bought IRBT, the same day it went up 3 points, the next day it went up another 2. Yesterday it lost about 3.5. Obviously I should have gotten out sooner. But how could I have known? What should I have looked for? I know IPOs are speculative, but what do you guys do?

Thanks, Tom

The short answer is if there was an easy answer to those questions we would all be rich and retired.

The tracking of Cramer's picks on thestreet.com is still a little misleading and not fully transparent. Notice that the entry price is the day's closing price BEFORE Jim makes his pick on the air. Since Mad Money airs AFTER the market close, practically it is not possible to get they entry price listed on thestreet.com. If Cramer issues something like a triple buy on a not-so-big cap stock, Cramer followers will actually inflate the price so that it gaps up the next day. My point is that the entry price should be listed as the opening price on the day AFTER Cramer makes his pick on the air.