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I think what the author is trying to point out here is that in the world we live in today the stock market indexes are less valuable. Stocks used to be able to
by adim86 8y ago
I think what the author is trying to point out here is that in the world we live in today the stock market indexes are less valuable. Stocks used to be able to be bought using technicals like the P/E ratio and other financial tools. As companies like facebook and snapchat and the likes. Companies whose values cannot really be calculated by the assets they hold (land, machines and factories etc). Their value is in their Brand, their IP and other subjective articles. But they are listed in the stock market and they dominate the stock market today. It generally makes these tools weaker in calculating the value of the market using stocks which was created for an industrial age
- JumpCrisscross 8y ago> Companies whose values cannot really be calculated by the assets they hold Assets have value for the cash flows they promise. Facebook is a dead simple valuation exercise on a PEG basis.
- frockington 8y agoStock in Facebook is the same principle as stock in Ford. You are simply buying a share of the company. I don't see how indexing them is any less the beneficial now then it was twenty years ago
- kgwgk 8y agoIn March 2000, tech companies represented 35% of the S&P 500 by market cap. Cisco was briefly the largest company in the world, with a market cap similar to Facebook today (taking inflation into account its market cap was similar to Amazon today). https://www.bizjournals.com/sanjose/stories/2000/03/20/story2.html https://www.bizjournals.com/sanjose/stories/2000/03/20/story... These were the ten largest companies in the S&P 500 in January 2000: Microsoft, Cisco, Intel, IBM, AOL, Oracle, Dell, Sun, Qualcomm, and HP.