That is exactly what a mysterious gambler, known in the betting world as “The Joker,” did in Texas. He bought up millions of combinations and walked away with a mind-boggling jackpot of US$57.8 million (about RM272 million).

To the average person, this sounds like a crazy, high-stakes stunt. But behind “The Joker” was a man named Zeljko Ranogajec—an ultra-private, highly brilliant Tasmanian math whiz turned betting legend.

This raises a fascinating question for us as wealth-builders: Did Zeljko cheat? Or did he simply apply investment-level thinking to a system most people treat as a game of pure luck?

The truth is, he didn’t gamble at all. He executed a massive arbitrage play.

1. What is Arbitrage (And Why You’re Probably Already Doing It)?

Don’t let the financial jargon scare you. Arbitrage is simply the act of buying low in one place and selling high in another. There is no magic to it—just simple math and execution.

In fact, you are probably already doing some form of arbitrage in your daily life without even realizing it:

• Currency Plays: Spotting that the Thai Baht is weak, buying it from a local money changer during the off-peak season, and using or selling it when demand peaks during holidays.
• E-commerce Flipping: Finding a bargain item on Shopee or bulk-buying from an overseas supplier, then reselling it at a premium on Carousell or local Facebook groups.
• Property Flipping in Cheras: Hunting down an undervalued, run-down double-storey terrace house, renovating it to increase its value, and selling it at market price.

Lottery arbitrage might sound extreme, but it is built on this exact same foundation: exploit market inefficiencies, apply sufficient capital, manage the operational risks, and walk away with a predictable profit.

2. The Investment Lesson Behind the Lottery Caper

How did “The Joker” turn a lottery drawing into a guaranteed win? Luck didn’t play a part. It was a highly calculated investment strategy built on three pillars:

A. A True Statistical Edge

Zeljko didn’t cross his fingers and hope for his favorite numbers to show up. His team calculated that when the Texas Lottery jackpot grew large enough, the payout pool significantly exceeded the cost of buying all possible number combinations. By covering 99.3% of all possible numbers, they essentially removed “luck” from the equation.

B. Massive Capital Strategy

You can’t play this game with pocket change. To print and purchase almost every single ticket combination, his syndicate needed over US$25 million (around RM120 million) upfront. He had to secure backing, pool capital, and structure the venture exactly like a private equity fund.

C. Flawless Operational Execution

Buying millions of physical lottery tickets before the draw deadline is a logistical nightmare. It required coordination with dozens of retail outlets, specialized software to generate the numbers, and a dedicated team working around the clock.

The Investment Parallel:

When you look closely, this is no different from premium investing.

• It is like snapping up Real Estate Investment Trusts (REITs) when they are trading significantly below their Net Asset Value (NAV).
• It is like strategically timing your capital placement between Fixed Deposits (FD) and ASB returns based on Bank Negara’s Overnight Policy Rate (OPR) trends.

In both cases, you aren’t guessing. You are looking for a structural mismatch between price and value, and deploying capital to capture the spread.

3. The Risks: Why This Isn’t a Free Meal

Before you start looking up the next Magnum or Sports Toto jackpot, we need to talk about risk. Arbitrage is never completely risk-free.

If it were easy, everyone would do it. Zeljko faced massive, terrifying risks:

• Operational Failure: What if a ticket printer jammed? What if a courier got stuck in traffic? If his team missed even a small percentage of the tickets, and the winning combination happened to be in that missing batch, the entire RM120 million capital could have been wiped out.
• Regulatory Changes: The Texas Lottery has since tightened bulk-purchase rules to prevent syndicates from doing this again. It is very similar to how Malaysian banks eventually crack down on “credit card point hacks” or cash-back promotions when too many people exploit the loophole.

The Reality Check:

Not all arbitrage attempts succeed. Without deep financial literacy, flawless execution, and proper due diligence, a “sure win” can very quickly turn into a “sure loss.”

4. The Gambler Who Is Actually an Investor

Zeljko Ranogajec is often labeled a “gambler,” but he is actually an investor in disguise.

He reads data and analyses betting pools the same way a Wall Street quantitative analyst analyses stock. He only deploys money when the mathematical odds are overwhelmingly in his favour.

He is not alone. Think of other legendary figures:

• Blackjack Card Counters: They don’t rely on gut feelings. They track the ratio of high-to-low cards left in the deck to mathematically flip the house edge in their favor.
• Professional Horse Betting Syndicates: They operate complex algorithms, analyze track conditions, and manage risk parameters exactly like high-frequency hedge funds.

These people do not “gamble.” They invest with cold, hard probability, leaving absolutely no room for emotion.

5. The Investor Who Is Actually Gambling

Now let’s look at the flip side of the coin.

While professional “gamblers” are acting like calculated investors, a shocking number of retail “investors” are actually gambling in disguise.

Do any of these Malaysian investor traps sound familiar to you?

• Dumping your hard-earned savings into a hot stock because a “WhatsApp tip group” or your friend’s uncle said it’s going to double next week.
• Apeing your money into the latest trending cryptocurrency because of FOMO (Fear Of Missing Out), without ever reading its whitepaper or understanding its utility.
• Chasing highly volatile, speculative “goreng” counters on Bursa Malaysia, hoping for a quick, effortless flip.

Let’s call this what it really is: Gambling. When you do this, you are no different from someone walking into a Genting casino, putting their life savings on red at the roulette table, and hoping Lady Luck smiles on them. You have no statistical edge, no risk management strategy, and no control over the outcome.

6. How to Think Like a Real Investor (Not a Gambler)

If you want to transition from a speculative gambler to a sophisticated wealth builder, you must change your framework.

Ask yourself these questions before putting your money into any opportunity:

1. Do you know the true risks? If you only look at the potential upside and ignore the downside, you are gambling.
2. Do you have an exit strategy? Knowing when to sell—both to cut losses and lock in profits—is what separates professionals from amateurs.
3. Is your portfolio built on a system, or just “hope and vibes”? In my teachings, I always talk about the “four wheels” of personal finance: Income, Expenses, Assets, and Liabilities. For your wealth vehicle to move forward smoothly, all four wheels must be aligned.

When you buy a true asset, it should be something that predictably grows your wealth or generates cash flow over time. If you buy a highly speculative asset that keeps you awake at night, constantly checking your phone in panic, it isn’t an asset—it’s a liability draining your mental energy.

What We Can Learn From The Joker

Don’t look at Zeljko’s story and envy the jackpot. Instead, look at the system he built to capture it.

Legal arbitrage is simply the mastery of math, capital, and patience.

On the other hand, gambling with your financial future by chasing get-rich-quick schemes is the real danger. The stock market and real estate are incredible wealth-building tools, but only if you treat them with the respect and calculation they deserve.

Let’s leave the emotional guessing to the tourists at the casino tables.

“The Joker didn’t gamble—he calculated. Can you say the same for your investments?”

Keep calculating, keep learning, and be money smart.

Without a formal Business Value Preservation (BVP) strategy, that bridge can collapse the moment a shareholder is no longer in the picture. True legacy planning is not just about growing a company; it is about ensuring the value you have painstakingly built is accessible when your family needs it most.

The “Paper Millionaire” Trap: Why Shares Aren’t Always Cash

To understand the stakes, consider the case of “Company ABC,” a successful factory owned by three siblings: A, B, and C, with ownership splits of 30%, 40%, and 30%, respectively. When Brother B suffered a sudden, fatal heart attack, his 40% equity—worth millions on paper—passed to his wife and three young children.

On paper, the family was wealthy. In reality, they were destitute.

His wife, having never been involved in the daily operations, found herself suddenly thrust into a board-level dispute for which she was neither prepared nor equipped. When she approached her brothers-in-law for funds to cover living expenses, the family bond evaporated in the face of business reality. The surviving partners, facing their own operational pressures, could not or would not accommodate her. Her dividends ceased, and her equity became a dormant asset.

This is the “Paper Millionaire” trap: Equity is not liquidity. Surviving partners often prioritize business reinvestment or personal survival over supporting a deceased partner’s family, leaving heirs holding “value” they cannot spend.

The 100% Probability We All Ignore

Business owners are masters of risk—we calculate market fluctuations, supply chain disruptions, and competitive threats with precision. Yet, in my 25-year career, I have seen one barrier that most owners fail to breach: their own mortality.

While entrepreneurs often treat death as a remote percentage, the reality is clinical and absolute. It is a 100% certainty that every business owner will eventually exit their business. Ignoring this certainty leaves the company and your family vulnerable to a chaotic, unplanned, and often litigious transition.

The Legal Dead-End: Why “Cashing Out” is Often Prohibited

When a partner passes away, the instinct of the survivors is often to use company cash to buy out the shares to help the grieving family. However, this is frequently prohibited by law. Under regulations such as Section 123 of the Companies Act, businesses are often restricted from using company funds to purchase their own shares or those of their shareholders.

This creates a funding crisis. Here is why the common solutions fall short:

• Bank Loans: Surviving partners may try to borrow the funds. However, banks are notoriously hesitant to lend to a company that has just lost a key partner, often viewing it as a high-risk entity.
  
• Personal Savings: Partners could use their own after-tax savings. To pay out one dollar of share value, a partner must earn significantly more to account for taxes. Very few partners have millions in liquid cash ready at a moment’s notice.
  
• Company Cash: As noted, this is often explicitly forbidden by law, risking severe legal and regulatory repercussions.

The “0.02 Cent” Solution: Leveraging Life Insurance

The most effective exit mechanism is a Buy-Sell arrangement funded by life insurance. I call this the “0.02 cent” solution because of its extreme cost-efficiency. It uses the smallest amount of capital to secure the largest amount of liquidity.

Why Insurance Funding Wins:

1. Immediate Liquidity: The moment the policy is active, the full funding for the buy-out is established, regardless of how long the partner has been in the business.
   
2. Guaranteed Payment: Unlike bank loans, which require approval, the payout is guaranteed upon death, ensuring a smooth exit.
   
3. Capital Preservation: It is the only method that allows survivors to acquire 100% control of the company without draining their personal wealth or the company’s operating capital.

Beyond the Payout: The Role of the Trustee

Securing the money is only half the battle. Without a professional Trust Company acting as a neutral intermediary, the share transfer can be paralyzed. If shares fall into a deceased partner’s estate without a pre-arranged structure, they can be frozen in probate for years, leaving survivors unable to make major business decisions and the family unable to access their inheritance.

A Trustee coordinates the Buy-Sell agreement, ensuring shares transfer immediately while the funds are protected for the heirs. To make this arrangement legally airtight, you generally need four components:

1. A formal Buy-Sell Agreement.
2. A Trust Arrangement.
3. Power of Attorney (to mitigate probate delays).
4. Life Insurance.

Conclusion: The Fair Exit

A proactive Buy-Sell arrangement is the only truly fair solution. It honors the deceased by ensuring their family receives fair market value for their contribution, and it protects the survivors, allowing them to maintain control of the business without the interference of unequipped heirs or the burden of crippling debt.

Because no one knows which shareholder will exit first, this planning protects every partner equally. It transforms a business from a potential liability into a guaranteed legacy.

A Final Thought: If something happened to you tomorrow, would your family be left with a valuable business legacy, or just a pile of paperwork they can’t spend?

Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or tax advice. Business laws vary by jurisdiction. Please consult with a qualified professional to assess your specific business requirements.

Watch Webinar Recording Here:

Link: Business Succession Planning for SME Owners Never Prepare For and How to Overcome It

Especially if you’re looking after both kids and parents, you don’t have extra hours to give to the office. You’re already squeezed for time and energy. You need a system that grows your bank account while you’re catching some Z’s, dealing with school runs, or taking your parents to their appointments.

Here’s a simple 5-step plan to stop chasing every ringgit and start building something that actually lasts.

1. Systems Beat Willpower Every Time

Wealthy people aren’t superheroes with infinite self-control! They just treat their money like a project with clear, unbreakable rules. We often think we fail because we “aren’t disciplined enough,” but the truth is that willpower is like a battery—it drains pretty fast every time you have to make a tough choice.

If you have to decide to save every single month, eventually you’ll have a bad day and spend that money instead. Don’t rely on your mood to save. Make growth your “default setting” by automating your accounts. Set up your bank to move money the second your salary hits. That way, your wealth grows without you even having to be in the room!

2. Be the CEO of Your Own Bank Account

Try managing your money like a little company. A CEO doesn’t just keep all the cash in one big messy pile; they allocate it to different departments.

• The HQ Account: This is your home base. Every cent you earn—salary, bonuses, or side-hustle cash—lands here first.
  
• The “Allowances” (Spending Accounts): Give yourself a set amount of “spending money” each month. Move this into separate accounts or cards specifically for bills, groceries, and fun.
  
• The Golden Rule: Never spend straight from HQ! Think of the HQ account as a “restricted zone.” Whatever is left over in that main account after the allowances are sent out is your company “profit”—and that’s the sacred capital you invest immediately to grow the business of You.

3. Keep an Eye on These Three Numbers

You don’t need to be a math whiz or a Wall Street analyst, just keep a close watch on these three vital signs:

1. The Safety Net: Life happens, especially when you’re caring for a family. Aim for at least 6 months of expenses in a spot where you can grab it easily (like TNG Go+). This isn’t just for emergencies; it’s “sleep-at-night” money. It’ll earn a bit of interest every day while staying ready for whatever life throws at you!
   
2. The Debt Limit: Debt is like a leak in your engine. Try to keep your monthly loan payments—mortgage, car, and credit cards—under 35% of what you make. If you’re paying more than that, you’re mostly working to pay for your past instead of funding your future.
   
3. Real vs. Fake Assets: This is a big one. Real assets put money into your pocket (like dividend stocks or a small business). Your own house is actually a “fake” asset in terms of cash flow, because it takes money out for taxes, insurance, and repairs. While you need a roof over your head, don’t let your home be your only plan for wealth. Focus on buying things that pay you back!

4. Invest Like a Robot

We humans are emotional creatures. We get a “fear of missing out” (FOMO) when everyone is talking about a new coin, and we tend to panic and sell when the news looks scary. To win the game, you have to take the “human” out of the equation:

• Go for “Boring” Wins: A steady, boring 8–10% a year from the stock market is a miracle of math over time. It’s way better than those “get-rich-quick” scams you see on Telegram promising 30% in a week. If it feels like a rollercoaster, it’s probably a gamble, not an investment.
  
• Set it and Forget it (DCA): Set up an auto-transfer for your investments, known as Dollar Cost Averaging. Robots don’t get scared when the market dips; they just keep buying the same amount every month. When prices are low, your “robot” buys more shares. When prices are high, it buys fewer. Over a decade or two, this consistency leads to a massive fortune that would make a professional trader jealous!

5. Build a Legacy, Not a Show

At the end of the day, you’ve got two main choices for how you want to live:

• The Vanderbilt Way: This is about spending everything on “status” to look rich. The Vanderbilts were once the wealthiest family in the world, but they spent it all on massive mansions and parties just to keep up appearances. Within a few generations, the money was gone.
  
• The Rockefeller Way: This is about focusing on stewardship. They focused on teaching their kids how to handle money, how to keep the system running, and how to give back. They didn’t just pass down money; they passed down a system.

The Goal: True wealth isn’t about a fancy car or a designer bag; it’s all about Time and Freedom. If you’re spending just to show off to people you don’t even like, you’re basically a high-paid slave to your own image! But if you spend on your values and your family’s future, you’re building a real legacy that will last long after you’re gone.

Your P.A.T.H. Forward

1. Plan: Stop waiting for a “lucky break.” Realize that being wealthy is a skill you can learn and a structural system you can build.
   
2. Approach: Be patient. Aim for that steady 8–10% long-term growth. Remember: the first few years feel slow, but the last few years feel like a rocket ship.
   
3. Tools: Don’t overcomplicate it. Stick to the basics like low-cost ETFs and money market funds.
   
4. Home: Get the whole family on board! Talk to your partner and even your kids about these goals. The whole thing falls apart if one person is trying to save for a legacy while the other is busy building a “castle” to show off to the neighbors.

So, here’s the final question: Are you building a temporary castle for show, or are you engineering a foundation that’s going to grow forever?

PWM Members can watch the webinar here:

Link: Stop Grinding So Hard and Start Building a Money System!

For decades, the traditional rental narrative was a slow “buy-and-hold” strategy yielding a modest 3% to 4%—barely enough to service a modern mortgage. However, the playbook is being rewritten. Here, I would like to list down 5 Surprising Realities of Modern Airbnb Investing.

1. The 2031 LRT “Game Changer”: Future-Proofing Scarcity

In real estate, infrastructure is the ultimate catalyst, but the upcoming Light Rail Transit (LRT) project is more than just a traffic solution. Scheduled for completion in 2031, the 21-station line represents the only viable direction for Penang’s future expansion. It connects the airport directly to Silicon Island—a massive reclamation project that serves as the island’s only answer to its flat-land shortage.

The strategic analyst’s move isn’t to buy in 2031 when values have already peaked, but to position oneself now along the stretch from the airport to the industrial hubs. “The LRT is a game changer for the state’s accessibility,” notes Michael Yo. Projects like the Maritime Signature are positioned just a “stone’s throw” from Station 17/18, ensuring that as the island becomes more connected, these units become “future-proofed” hubs for both commuters and travelers.

2. The “Studio Fallacy” – Why Penang Isn’t Kuala Lumpur

A common mistake for investors is applying the “KL Model” to Penang. In Kuala Lumpur, compact studio units thrive on solo business travelers. In Penang, however, the tourism DNA is fundamentally different. The island is a destination for the “tribe”—multigenerational families and groups from China, Indonesia, and the Middle East.

For these travelers, a studio is a constraint; they seek “home-away-from-home” functionality. The data shows a clear cultural preference for units that offer:

• Space for Connection: Multi-bedroom layouts that allow families to stay together rather than splitting across separate hotel rooms.
  
• Operational Independence: Full kitchen facilities and in-unit laundry, essential for the Indonesian medical tourist or the long-stay Middle Eastern family.
  
• The Group Dynamic: While a KL business traveler needs a desk and a bed, a Penang vacationer needs a living area where the group can gather.

3. The 70% Rule – Why “Bans” are a Professional’s Best Friend

Recent headlines regarding the “Airbnb Ban” in Penang have scared away the amateurs, which is exactly why professional investors are leaning in. The state has restricted short-term rentals (STR) in residential-titled buildings, requiring a rigorous 70% owner approval threshold in Joint Management Body (JMB) or Management Corporation (MC) meetings.

This regulatory hurdle acts as a “filter,” clearing the field of oversupply and amateur competition. By funneling demand toward specifically approved commercial-titled properties, the state has stabilized yields for serious players.

“There is a massive difference between the risk of ‘meeting under a tree’ to exchange keys for an illegal residential unit and the safety of an approved commercial project,” says Michael Yo. “Regulation protects the professional’s ROI by ensuring your competition can’t simply pop up in the apartment next door.”

4. The Medical Tourism & Digital Nomad “Safety Net”

While holiday crowds drive the peaks, the “safety net” of the Penang market is its secondary segments. Specifically, Penang is a premier hub for Indonesian medical tourists who often require “long-stays” of two to four weeks for recovery. These guests prefer the comfort of a private apartment over a hotel, providing high-occupancy stability during “low months” like April when traditional tourism dips.

Additionally, the rise of the Digital Nomad—those seeking high-speed Wi-Fi and a “live, work, play” environment—provides a mid-term rental buffer. These segments ensure that the unit remains a cash-flow engine 365 days a year, not just during school holidays.

5. The Power of Low-Density “Flexible” Units

The ideal investment profile in the modern market is the “versatile” commercial unit. Take the Maritime Signature project at Kapal Singh Drive as a case study. Developed by the Taiwanese-backed Binary Development with IGM as the main contractor, it offers a crucial metric: only 8 units per floor.

Low density is an analyst’s dream because it minimizes internal competition for bookings, maintaining a high Average Daily Rate (ADR). This project also utilizes a “Dual-Exit Strategy”:

1. The Airbnb Pivot: Using professional “Free Reno” packages designed specifically for the “Instagrammable” aesthetic that triggers the 4.5+ star ratings required by the booking algorithms.
   
2. The Class A Office Pivot: Because the units are commercial-titled and Georgetown’s existing office stock is increasingly dated, these units can easily transition into professional office spaces if the market shifts.

Conclusion: The 10-Year Horizon

The days of the 30-year mortgage slog are over for those who understand the new rental code. By optimizing for the short-stay model, investors are targeting an ROI of 8% to 12%—a figure that remains robust even after accounting for the 20-30% fees charged by professional operators.

As the LRT moves toward its 2031 completion and Silicon Island begins to rise, the island’s scarcity will only intensify. The fundamental question for any prospective investor remains: Would you rather spend three decades paying off your own debt, or let the “2031 traveler” build your equity for you? In the new Penang market, the answer is written in the data.NotebookLM can be inaccurate; please double check its responses.

PWM Members can watch the webinar recording here:

Link: Cracking the Penang Rental Code

A Co’s current P/E Ratio stands at 20. 

B Co’s current P/E Ratio stands at 30. 

So, does it mean that A Co is more attractive an investment than B Co?

Let’s examine. 

Here, I’ll share two methods on interpreting their current P/E Ratios. 

They will shape my perspectives on their attractiveness as investments. 

Before I share the two methods, let’s add some context to both stocks: 

A Co and B Co

For A Co, it is a national champion that operates in a matured market. It is a cash cow which has a track record of paying out 80% of its earnings to shareholders in dividends and keeping about 20% of its earnings for plant repairs and maintenance purposes. At present, A Co’s details are: 

Stock Price = $20.00
Earnings per Share (EPS) = $1.00
P/E Ratio = 20
Dividends per Share (DPS) = $0.80 (80% of $1.00)
EPS Growth Rate = 0%

For B Co, it is a global powerhouse. Like A Co, it is also a cash cow. But unlike A Co, B Co invests 100% of its earnings back into the business, expanding its moat (dominance). As a result, B Co’s EPS is growing at a rate of 15% per annum. At present, B Co’s details are: 

Stock Price = $30.00
Earnings per Share (EPS) = $1.00
P/E Ratio = 30
Dividends per Share (DPS) = $0.00
EPS Growth Rate = 15%

Method 1 – Comparing Current PE with Historical PE

This method involves comparing their P/E Ratios with their historical P/E Ratios (10 years). 

Here is the rationale. 

Let’s say, in Year 0, you bought an apartment for $480,000 for investment. 

You secured a tenant that pays $2,000 a month / $24,000 a year in rent. 

So, your rental yield is 5% per annum. 

10 years later, you manage to raise the rent to $2,500 a month / $30,000 a year in rent. 

If investors continue to expect 5% in annual rental yield, what’s the value of your apartment? 

Answer = $600,000. 

What went up in those 10 years? Answer = Property Price. (Price)

What was the driver for its appreciation? Answer = Rental Income. (Earnings)

What had remained constant in those 8 years? Answer = Expected Rental Yield (Valuation)

This rationale (or concept) can be applied on stocks. 

Referring back to A Co and B Co. 

Let’s say, over the past 10 years, A Co’s shares were trading on average at a P/E Ratio of 25. That is also the same with B Co. 

At current P/E Ratio of 20, A Co is undervalued as it is below its historical average of 25. 

As for B Co, it is overvalued as its P/E Ratio of 30 is above its historical average of 25. 

So, is that it? Is A Co definitely a winner when compared to B Co?

Let’s dive deeper. 

What Are We Investing For?

Here, it is helpful to revisit our purposes for investing in stocks. 

It is primarily to achieve sustainable capital growth in the long run. 

Of course, in the meantime, it is always nice to receive dividends. Hopefully, they will grow too. 

Hence ultimately, growth is what we are looking for. 

Such is achieved more sustainably with growth in earnings per share (EPS), which is contributed by long-term sales growth, earnings growth and share reduction. Companies that could deliver such financial results often have competitive advantages, which are often known as moats. 

So, it is fundamentals that drive long-term growth, be it capital growth or dividend growth. 

Method 2 – Comparing PE with EPS Growth

With this in mind, it is crucial to assess the fundamental qualities of a stock before investing. 

By factoring in growth, we discover that the payback period for investing in B Co is shorter. This is even if its P/E Ratio is higher than A Co. 

Here are the maths. 

For A Co, its payback period is 20 years. 

Investors who opt for A Co shall invest $20 to earn $1 every year. Since its EPS doesn’t grow, the shareholders shall earn $20 by holding onto A Co for 20 years. 

But, what about B Co? 

In Year 0, its EPS is $1.00. 

In Year 1, its EPS is $1.15 as it grows at a rate of 15% per annum. 

In Year 2, its EPS would grow further to $1.32. 

In Year 3, its EPS would grow further to $1.52. You can generate a table as follows:

Investors who opt B Co may (in a glance) pay a higher PE for its shares (PE = 30). 

But, their payback period is between 11 to 12 years, a lot faster than A Co. 

Based on this perspective, B Co is more attractive than A Co despite having a higher P/E Ratio.

Notes: 
A Co – Invested at $20 (PE = 20). Earned back in 20 years. 
B Co – Invested at $30 (PE = 30). Earned back in 11-12 years. 

So, do we use Method 2 over Method 1?

Well, not entirely. 

Personally, I use both depending on situations and context. 

Let’s say, I’m considering an investment into a growth stock. I’ll use Method 2 first to evaluate its investment attractiveness. Then, I’ll use Method 1 as a guide on determining my entry prices. As an investor, I’ll still prefer to invest when its current P/E Ratio is either below or (if above, close to / not too far away) from its historical long-term P/E Ratio. 

But, if I want to invest in a pure-breed dividend stock, I’ll only use Method 1. 

All in all, the first priority is on EPS growth. 

The second priority is on its valuation. 

Conclusion: 

There are a few conclusions to this: 

1. A low P/E Ratio does not necessarily mean that a stock is an attractive buy. 

2. The context (business growth & fundamentals) is important. 

3. Growth > Valuation. 

4. A stock with a high P/E Ratio can be attractive as an investment if its growth rate is solid. 

At the end, the focus is to shift from “buy cheap” to “buy growth at reasonable prices”.