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To be fair, I went long when S&P was around 2500. My reasoning was/is that if you run a DCF on large-cap US equities, then only about 10-15% of the NPV is deri
by dcolkitt 6y ago
To be fair, I went long when S&P was around 2500.
My reasoning was/is that if you run a DCF on large-cap US equities, then only about 10-15% of the NPV is derived from the next eight quarters. So even if corporate profits go to zero until 2022, the underlying assets are still valuable in a post-pandemic world.
For example in 2007, we were paying $500 billion for Citigroup, and it turned out that it just wasn't worth anywhere near that. It's still 90% off its 2007 high. My sense is that even if Disney World is shut down today, in 2022 it will still be worth what Disney World was in 2019. Besides maybe Boeing, I don't see any equivalent to Citigroup or Enron in today's market.