Compared with 2000, tech is playable gas zone edenvale

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I’ve been running a bunch of money almost as long as Warren Buffett, but Warren’s made a bigger pile. I founded and was formerly CEO, CIO of Atalanta Sosnoff Capital, LLC, a private gasset y ortega filosofia investment management company. Sold my Geico and American Express holdings prematurely, but sported one of the first beards on Wall Street in 1964. I was a hedge fund operator when only a handful of investors could define this construct. Later, I made a hostile tender for Caesar’s World, 1987, but my corporate clients frowned on this gambit gas lighting urban dictionary. Today, activist operators like Carl Icahn stand revered as saviors. While a Forbes columnist for many years, the late, great editor of Forbes, Jim Michaels, forbade me to use Yiddish expressions because his readers in North Dakota wouldn’t get it. Alas, I can’t make a living as a writer. I’ve learned to be Humble On Wall Street. Silent Investor, Silent Loser embraces a shareholder activist theme along with my love of France and contemporary art. My new book, Master Class for Investors, is available at amazon.com and barnesandnoble.com. Its theme is the interaction between perception and misperception in financial markets and the art world. Contact Martin Sosnoff

My memory electricity trading jobs of carnage during the tech bubble of 2000-01 is indelible. Microsoft was the best of the worst, down just 20%. Shrinkage among the top 10 names in the Nasdaq 100 Index ranged up to 80% with Cisco down 77% and Intel minus 63%. Meantime, internet infrastructure tgask providers like Akamai Technologies and Inktomi sold at 80 to 100 times revenues. Analysts employed 10-year discounted cash flow models to justify their picks.

Armchair investors coulda turned down tech then as overpriced just by looking at five-year comparisons of price-to-revenues metrics. Anyone who pays more than two times the growth rate for anything is bound to incur severe heartburn. Overvaluation in tech took some 25 years to correct. This sector now sells closer to parity with the SP 500 Index at 18 times earnings, itself a heady multiplier.

Microsoft then sold at 12 times next year’s projected revenues with Intel at eight times. The most outlandish reading belonged to Qualcomm at 19 times. Hewlett Packard sold at one times sales with IBM at two times. Facebook was still a dormitory concept. Nobody talked much electricity in the body causes about Apple’s computer while Cisco Systems at 17.7 times trailing three-year average price-to-sales stood egregiously rich but blessed by the analyst community electricity youtube.

Fast forwarding to 2015, Microsoft held onto its primacy with a market cap of $349 billion. (Minimally changed during 14 years.) But, its defining metrics had diverged markedly. Microsoft now sold at 3.7 times projected forward year’s revenues. Cisco rested at three times and Qualcomm fell back into the pack at four times revenues. Intel kicked off the nineties at 10 times earnings, perceived as a viciously cyclical operator. By 1998, it sold at 30 times earnings, accepted static electricity zap as a great growth story. Cisco at its peak sold over 80 times projected results.

Speaking of volatility, average monthly price changes for Nasdaq ran above 11% in 2001. This was its high watermark since creation of the index in 1971. The 2001 technology rout stands as the striking metaphor for the shabby decadence of Wall Street’s so-called star analyst system and their underwriting houses that flogged bad paper, riding down their picks 80% to 90% before turning “neutral.”

Because stock grants are made year-after-year, Warren Buffett is right that these recurrent charges that should be expensed, annually. The Securities and Exchange Commission weasels out of this issue by just requiring static electricity bill nye full episode publication of both methodologies in financial statements. Analysts never address GAAP earnings because they’d have nothing to flog and managements could deny them access.

Today, when national gas average 2012 you look at big internet and e-commerce names like Amazon, Alphabet, Facebook and Alibaba, you are looking at $500 billion to $800 billion sized market capitalizations. Throw in Microsoft, now high man in the SP 500, dishing out Amazon. There’s logic herein because Microsoft sells on earnings momentum, free cash flow and a price-earnings ratio no more than 1.5 times market valuation a gas is a form of matter that.

Let’s review price-to-revenues comparisons, currently vs. 2015. Amazon then traded at 1.7 times revenues, but now we’re over three times. Facebook ticked then at a heady 12 times revenues, now closer to 5.5. Microsoft was at 3.7 times revenues, but this has moved up to 6.5 times as Microsoft is very profitable. The preferred metric is its price-earnings ratio, still playable. Alphabet, 2015 sold at six times revenues, now closer to five times. At least, on price-to-revenues comparisons, tech is no longer so pricey, excepting Amazon where everyone’s waiting for e-commerce earnings to kick in.

Microsoft is my pick because you can work with traditional yardsticks like gas efficient cars under 5000 price-earnings ratios and the free cash-flow multiplier. It’s my candidate to dominate the SP 500 Index for years to come. Still, there’re elements in the income statements of Facebook and Alphabet that are undeniably powerful. Both spend 15% of revenues on RD and operating cash flow numbers are sizable relative to market capitalization. Shadows of government regulation do hover over Facebook and Alphabet. Coming operational controls could be more confining than what the banking sector faced after the 2008-09 gas and water llc meltdown.

Facebook, in the midst of enormous management upheaval, is too sketchy to model definitively. Who knows what happens to viewer usage and thereafter its advertising rate structure? Zuck’s vision for his company is as yet unsaid. I’m underweighted, but operating cash flow numbers keep me interested. Past summer’s high of $218 is a fond memory but Facebook did bounce up 30% from its $123 low.

I assume the enormous spend for RD and marketing continues types of electricity, showing some productivity. Present free cash-flow yield looks like 4%, a non-dismissive number. Nor is its operating cash flow multiplier of 15 irrelevant. Last year, corporate head-count rose 42% to 35,000. I’ve never seen such scale-up in employment, anywhere excepting an army on a war footing.