Texas Proud
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- May 16, 2005
- Messages
- 17,383
That sounds a lot like "it's going to be different this time". It might be different, but it seems like the rules of economics are still basically in place. Balance sheet assets are certainly different than intellectual capital, and widgets, different than services, but either way, they've got to be making a profit in the long run or they will fail.
I actually think it is different now than before... companies are coming out with valuations over $50 billion with few assets and low earnings... back when I was young, a market cap that big was a BIG company...... and had profits to back it up or paid the price...
Amazon has a market cap of $236 billion and does not make money....
Tesla has a market cap higher (almost $32b) than the regular auto companies and does not make a profit... heck, the are burning through cash like a dot com company....
There are many other companies that can be put into this category... they are hoping for a payday in the future like Google did...
It used to be hard for a company to grow so fast... now it seems like a company can go from nothing to $20B, $50B or even $100B valuation in less than a decade...
I heard that the total S&P 500 PE was around 15... that is not out of line... so even with these high flyers, the market does not seem overpriced...
Now, it does not mean there will not be a drop of 10% to 20%.... that can happen due to the Fed raising rates... but, since a timing method has to have two right calls, a sell and a buy or a buy and a sell, I will just live with what I know works for me....
OH, I also heard that the vast majority of gains came from 90 trading days over the past 10 years.... if you were out of the market during those days you were basically flat... another reason to just hold....