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The Penny & The Pint is a financial podcast hosted by John Shea and Brendan O’Brien, known as the "Old Irish Guys". Drawing on over 60 years of combined experience in financial services, the hosts aim to help listeners stop guessing about their finances and start building real wealth.
The show is designed to be a community resource for the South Baltimore neighborhood, featuring short, 10-minute episodes that balance local news and sports with high-level, actionable financial advice. Each episode typically includes two segments: "Local Flavor," which discusses current events in Baltimore, and a "Financial Deep Dive," which provides two or three practical steps listeners can apply immediately to their lives.
John: Welcome to The Penny and the Pint.
I'm John Shay, and across the
table from me is Brendan O'Brien.
We're the old Irish guys, and
we're here to help you to stop
guessing about your finances and
to start to build some real wealth.
Join us as we tackle some real-life
money problems, talk about some
city parenting stories, and
pick our spot for a few pints.
Brendan: John said I'm across the table
from him, but I'm really sitting over
here with my leg in the air because had
a little accident on the way to work.
John: Yeah.
It's been a tough morning
in the O'Brien household.
It's,
Brendan: It's been a tough
morning in the O'Brien household.
As I was scrambling around, late
for a call with a client turned
my ankle, rolled it, sprained it.
Knows?
Maybe it's broken.
I don't know.
Yeah.
But uh, I'm still here.
Showed up.
You did.
Showed up for our listeners.
My leg in the air.
But I think actually, John, I
think this is gonna work out for
John: Really?
Do tell.
Brendan: First of all, you did go
on the coffee run this morning.
And you delivered that
stuff right to my hands.
I didn't have to get up for that.
But also, the sprained ankle is on the
same leg that I wear my knee brace.
So
John: brace.
Brendan: Oh, great.
John: I
Brendan: I think I'm getting double
sympathy points all week at home.
Probably not gonna have
to do much of anything.
In fact, on our road trip in
the next few days, I don't
even think I'll have to drive.
John: Wow.
Is it your driving leg?
Brendan: Is it your driving leg?
It's… I don't know.
Aren't they both?
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
my left leg, but, listen I think
I'm gonna have to sit in the
back and doom scroll and- Yeah
watch my movies.
Perfect.
Can't possibly drive-
No … with a leg like this.
Brendan: we'll get you a doctor's
note or something to pass on to
your family to say you can't drive.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
Sympathy, empathy.
I'm in it for all of it.
All of it.
Bring it on, baby.
Brendan: right.
Hey.
right.
Right.
Let's see what I can
milk out of this thing.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
John, last, the last time we
talked in this little preamble
section, we talked about, BTS.
Brendan: yeah
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
Yeah.
Remember that?
Brendan: BTS show last night.
Another tonight
And are here tonight.
We talked about the upcoming BTS
concerts- here in Baltimore, and we
were right in the middle of them.
They played last night.
They play again tonight, and I
did go to the show last night.
Happy to report I've survived.
Actually a very enjoyable show, so
they'll be long gone when this airs.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
But hopefully some of our
listeners were able to take them
in because it was a fun show.
I knew, believe it or not, I knew
lot of the songs- Yeah … 'cause
the, uh, Mrs. Old Irish Guy.
I think She plays them all the time.
They're, come home and
they're just, they're playing.
She's streaming them all the time.
So I knew all the songs.
John: I have to do say that in, in
relation to the show, I'm getting
conflicting reports that the ankle wasn't
injured this morning, but it was actually
injured last night dancing around at BTS.
I'll never say.
It's uh you know do dance
You know.
who knows
Brendan: The morning limp is only
because of the, crowd surfing and
the jumping up and down and all
the other shenanigans from the show
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
I think that will have to forever remain
a mystery- Yeah … to our listeners here.
But guess what's not gonna be a mystery?
What we're gonna talk about in
the second half of the show.
Brendan: We have our second or,
uh, maybe our third installment
now of our Roman Empire, and we're
gonna talk about uh, P/E ratios.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
My Roman Empire is the title of our series
in which we talk to you about financial
topics that John and I obsess over.
Love it.
ep_23_my_roman_empire_and_p_e_ratios_Original_Purple:
Just- love it
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
it … wake up, eat it for breakfast.
And we're talking about P/E ratios,
and I know what you're thinking, Doug.
Yeah.
Snore.
Boring.
Yeah.
But we're gonna make it entertaining.
We're gonna tell you what they
are, how to use them or not.
And we'll obsess about that.
We won't be obsessing about
Korean boy bands- We will not
Brendan: anymore.
No.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
We won't be fanboying about that.
We will be fanboying about P/E
Brendan: But not till after the break
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
till after the break.
Not till after the break.
So we'll see you after the
Brendan: We're back.
Welcome back to The Penny and the Pint.
I'm John.
Across the table with his
broken ankle is Brendan.
And we're gonna talk to you
today about some P/E ratios.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
right.
Price over earnings.
Price to earnings ratio, simplest
definition is when you buy a company-
… or an index ' this is the price you're
paying for every $1 of earnings.
Brendan: Correct.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
Correct.
S- simple math problem.
Brendan: Yep.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
So we're gonna talk to you about how to
use P/E ratios in your investing, how
to talk about them, how to, be aware
of them, how to know when we're…
what we're paying is expensive, and
how to know what we're paying is cheap
Brendan: This is the P/E ratio is a,
it's a nice tool to have as you make
your investment decisions, and we're
gonna help explain the math behind it
a little bit and let you know, like,
where we've been uh, historically,
wrapped around some of these numbers.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
I think we should start with a little
illustration, maybe a little story-
Brendan: Okay.
Story time PE, I'll try
to get through it again.
Story time
PE, and I'll try to get through…
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
Yeah, it's storytime today.
Have a seat, John.
And I'll try to make this quick.
Imagine there are two pubs at the same
Brendan: Oh, terrific.
John, listen, stop drooling.
I know it's hard for you to imagine.
Actually, living in Locust Point,
there pubs on every corner.
Yeah.
So imagine there are two pubs for sale on
opposite corners of the same intersection.
Okay?
And let's just keep it really simple.
Each one earned 100 bucks last Not great.
But it was probably pretty fun.
right.
One pub is on sale for $1,000.
They're selling it for $1,000.
They made 100 bucks last
What's that PE ratio, John?
that's 10 times.
10 times.
So for every $10 you pay for
the pub, you get $1 of earnings.
Which is great.
The pub across the street
is selling for $2,000.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
They also made $100 So
what is that PE ratio?
Brendan: That PE jumps to 20
20. So you have the choice
to buy one pub or the other.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
And which one is more expensive?
John: The
Brendan: 20 times.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
And so we can see that if you buy one
pub, you're paying $10 for every $1.
The other pub, you pay $20 for $1.
So most of us would say let's
go to the first pub." "And
let's buy that one." Yeah.
" Because that's definitely cheaper."
Brendan: Correct.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
what we want to caution all of
our listeners is we can't only
use PE to make our decisions.
Brendan: Because what we-- If we
did a little more digging, John-
we would have learned that The more
expensive pub was about to build
a bigger parking lot- … door.
And they were gonna have valet
parking for free and all that and they
thought that would drive business-
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
so that they could earn
more than 100 next year.
Correct.
And that's why they are priced higher.
Yeah.
The other pub is up against
a hill and a rock ledge.
There's no parking there.
Brendan: Yeah, exactly.
I
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
you gotta dig into the
numbers and find out
ep_23_my_roman_empire_and_p_e_ratios_Original_Purple:
why.
John: Yeah.
And it's more than just
the numbers, right?
It's the news, right?
It's like, what's a company up
to that's gonna- cause it to
be a 20 times versus a 10 times
Brendan: earnings.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
Pub number two, the more expensive
pub on paper, had a competitive
advantage over pub number
Brendan: Very much so.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
So PE ratios tell stories like that, and
sometimes they're a little conflicting.
John: So PE ratios tell stories
like that, and sometimes
they're a little conflicting.
True.
Yeah.
Yeah.
Which is, yeah, exactly one
of the points we want to make.
You know, as we touched on, you
know, it's an important, uh, factor.
You know, it's good information to have,
but it shouldn't be your only piece of
information as you look to buy securities.
Brendan: That's right.
Right?
Because the, th-they're a static
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
That's right.
Right.
Because the, uh, the- they're a static
number, and they often look backwards.
Those are… That's called a trailing PE.
It's a real number because it's based
on what's actually been reported.
So your trailing PE of a stock
is some number, but it's based on
quarterly earnings reports that
have already and what's the co-
what's the other side of the coin?
What's the other PE that
ep_23_my_roman_empire_and_p_e_ratios_Original_Purple:
that
Brendan: we- Well, the, the other
one is looking forward, right?
It's the projections that the
marketplace is going to go ahead and
place upon bar one or bar two about,
what they expect to happen there.
These are analysts making conjectures
and a consensus about what they think
Pub Number Two is gonna earn next year
based on their new parking garage-
and their valet parking that's free.
I would love free valet parking
with my now broken ankle bad knee.
So I'm gonna need that, so I'm
definitely going to Pub Two.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
So trailing PE tells you where
you've been- forward PE guesses
about where you're going.
And these numbers are
good in and of themselves.
It's, it helps you to decide what
companies you wanna buy or what indexes
you wanna buy, and how do we know…
It seems like in a vacuum, though.
Brendan: You know, Like what…
Okay, so I have a PE of 20.
What does that mean?
How that compare
We have historical
information on that, right?
Like you said, the earnings, those
those become real numbers, right?
Traditionally, we've looked at this
and, we see the historical S&P long-term
average being 15 to 20 times earnings.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
Oh
Brendan: so the pub with the 20 times
earnings is right at the upper range
of what would be considered expensive
in terms of historical averages.
Whereas the pub at 10 times
earnings is cheap- in comparison,
but also may not have any growth
Right.
You to, You have to know the news,
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
So historically, the S&P 500,
as John said, trades between
15 and 20 times earnings.
Today, the market trades at about
27 times- forward-looking earnings.
Brendan: Remind us what forward is.
Are they- Guesses … are those real?
No, they're not.
deal?
No, they're
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
Oh, they're
ep_23_my_roman_empire_and_p_e_ratios_Original_Purple:
Projected, Projected.
Brendan: so any change in the
economic landscape could compress
those or lower those expectations.
Sure.
No doubt
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
Sure.
No doubt.
Which is why shocking economic
news tends to move the market.
Because these analysts
will redo their numbers.
Oh, growth is not as robust as we thought.
We're gonna take our numbers down, and
that's why the stock market might lose
10% over a period of time expectations
have been So forward-looking PE of
the S&P 500 is 27, which is m- very
expensive compared to its historical
Brendan: average.
Yeah, it's getting up there.
pricey.
Yeah.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
Though if we look backwards at trailing
earnings, the stock market is at about
20 times earnings, which is right
around… It's in the historical averages.
Brendan: the top end.
still expensive.
And uh, you know, if you're paying
attention out there, you'd know that
things are a little expensive out
ep_23_my_roman_empire_and_p_e_ratios_Original_Purple:
Right.
Yeah.
And it's expensive because, we project
that there'll be, better earnings for that
Brendan: That's right.
That's why it's, 20 times its PE ratio.
John: So this is how you use PE ratio to
analyze what you're about to purchase.
Are there some traps out there?
Yeah
Brendan: And when we do our analysis and
we do our comparisons, we don't wanna
compare a car company to a software
It… This, our analysis of the pubs
wouldn't work if one was a pub and
the other one was a convenience store-
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
or a hotdog stand- just wanna
make sure that we're comparing
things that are similar.
Also, there are occasion,
John, where people will pay
for something that has no PE.
John: Exactly.
Yeah.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
What is it?
What's
John: that mean?
How do you have no PE?
Brendan: we just came across that, right?
We just saw, you know, a company, you
know, come out with a really hyped
up IPO and, people bought it and-
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
SpaceX.
John: We, We don't wanna
pick on Elon too much,
Brendan: mean SpaceX?
ep_23_my_roman_empire_and_p_e_ratios_Original_Purple:
We don't want to pick
on Elon Musk too much.
No, I mean, yeah.
Went up and, now it's gone back down.
Yeah.
So has no earnings, so it's tough to
look at it and say, " we're going to
buy this based off of the PE ratio,"
because that number is not there.
John: Didn't have it, yeah.
But it was a very sought after
when it comes to supply and
demand- also drives pricing.
Brendan: Also drives pricing That helps.
Yeah
the negative PE or the lack of PE
just means that they didn't have any
earnings- in the past quarter, right?
So they might have had $10 billion
of revenue, but their expenses
were greater than their revenue.
Which means they had no earnings.
Had nothing to do with any of their
space junk smashing into the moon- week.
Although, that should count for something.
Doesn't help.
But there's still plenty of people who
believe that SpaceX will eventually
turn the corner- and have a positive PE
and a very high growth rate, which is
why the stock has recently rebounded.
It went below their IPO price, and
now they're on the way back up.
So PE is a great tool when it's used
in conjunction with other things.
Why don't… If we were
to recap and r- and
ep_23_my_roman_empire_and_p_e_ratios_Original_Purple:
Yeah
John: our listeners a little
bit of information to leave with
what do we wanna leave our folks
I think we wanna tell people that,
PE ratios can be used, to gain a
perspective not only on an individual
company, but also on an index.
Right.
Brendan: that just helps for you to
be able to look back to see, like
you said, if the projected is 28 and,
where the market is around now, and
traditionally the S&P has been at 20,
then you might want to think about
that and see if you're paying too much.
John: want to think about that
and see if you're paying too much.
Yep.
Number two, when you're doing your
analysis, which I know all of our astute
listeners do a lot of their own analysis.
Brendan: I know that 'cause a
lot of you haven't called us
for our help to- our analysis.
So give us a shout if you need any help.
Make sure you know if you're looking
at the trailing PE- Yeah … which are
actual real numbers based on reported
earnings, or a forward projection of PE.
These are estimates.
These are numbers that they,
that analysts and, uh, market
investors hope will come true.
John: And make sure to compare those two.
Number three?
Yeah.
Final point, number three.
The P/E ratio shouldn't be the
only thing that you look at when
you're buying a stock, right?
So as we talked about with the
pub example, did you know the
new parking lot was going in?
Because that news is relevant, and
that's gonna cause that P/E to move.
So you need to keep in mind, not only
the P/E, but you need to keep in mind
your expenses and your cash flow and the
news that, the company is involved in.
ep_23_my_roman_empire_and_p_e_ratios_Original_Purple:
So make sure your analysis is is deep.
Brendan: is, deep.
Yeah.
Yeah.
So do your homework, I think
is what we're trying to say.
Know if a company's going through
restructuring or if they have
a lot of debt or if they, they
recently had to take a charge or
if they're being investigated Yeah
They have, maybe they have
an exclusive contract.
knows?
Yeah.
Those things can have competitive
advantages or disadvantages,
and we just want you all to
be well-informed- P/E ratios.
Clearly, our listeners
can tell- how obsessed we
ep_23_my_roman_empire_and_p_e_ratios_Original_Purple:
Oh, love it.
Brendan: this.
Love it.
ep_23_my_roman_empire_and_p_e_ratios_Original_Purple:
Love the PE.
ep_23_my_roman_empire_and_p_e_ratios_Original_Green:
the PE.
Man.
Brendan: So with that we'll leave
you with this episode of My Roman
Empire, we are obsessed with.
If you have any questions,
you can always email us- at
info@oldirishguysfinancial.com
ep_23_my_roman_empire_and_p_e_ratios_Original_Purple:
Or you can check out our website
at www.oldirishguysfinancial.com.
Brendan: Yeah.
Check us out.
Reach out to us if you have any
questions about PE, or I'll field a
question too about last night's concert.
And if you wanna check in on
my convalescence- Oh, yeah
ep_23_my_roman_empire_and_p_e_ratios_Original_Purple:
Oh, yeah … on my Yep.
If you wanna throw Brian some
sympathy, you know how to reach us.
That's right.
Brendan: Hopefully somebody will
come home and carry me home.
over
ep_23_my_roman_empire_and_p_e_ratios_Original_Purple:
home.
Not it.
Brendan: until next time, we'll see you.
ep_23_my_roman_empire_and_p_e_ratios_Original_Purple:
See you at the pub,