I am totally new to finance and investing world, hence please bear my basic question.
I have a query on Ben's book The intelligent investor Page #115.
point #4 it says : The Investor should impose some limit on the price he will pay for an issue in relation to its average earnings over past 7 years. we suggest that this limit be set at 25 times such average earning, and not more than 20 times those of the last 12 months.
Does he mean that you should not pay more than $250, if we consider particular issue is having earning average of $250 for past 7 years.