Originally Posted by
Trip7
This entire post sounds errily like Tech investors in 2000, or Real Estate investors in 2007. Be careful out there.
"The key to investing is not how much an industry will affect society or even how much it will grow, but rather its ability to make and sustain profits. And history tells us that eventually all excessively exuberant markets succumb to the laws of gravity"
Burton Malkiel
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A couple things;
First-
Its very in vogue to compare the market today to the dot com bubble. So I’ll ask you this; is there a difference between Tesla and
pets.com? That’s why this isn’t the dot com bubble. Tesla is launching more starlink satellites today.
Second-
I added this update to my previous post and I want to repost it here, because it’s important“EDIT- For fun I checked on the history of morning star fair valuations. Their lowest since 2014 was 34.20 adjusted all the way up to its current “nose bleed” fair value of $349. Since 2014, if you anchored the price of Tesla based on Morningstar models and never bought because of it, you’ve missed out on some incredible growth. Like 15,000% kind of growth. And yet, Morningstar continues to “adjust” fair value up. What does that tell you?”
Third-
Do you think because you’re investing in “value stocks” today that they’re immune to the burst of a bubble? Bubbles, when they pop are indiscriminate and typically take entire economies with it. Based on your thesis you should not invest at all, and perhaps stash cash under your mattress.
Fourth-
I challenge what Mr. Burton Malikel says (what makes him so smart, anyways?). My challenge is based on this chart of the S&P alone (link attached. Still don’t know how to paste images to this board);
https://ibb.co/whR5RKN
Fifth-
When you invest in a company, do you want them to slow growth (be it geographically or by investing less in new technology) in an effort to maintain less EBIT and higher EV/EBIT, or would you rather they expand and invest heavily so as to increase EV in the future at the expense of the ratio today?