3 ms·

I don't think there's a tech bubble (outside of crypto I mean—that's an entirely different story). Tech (and software specifically) is enormously value creative

I don't think there's a tech bubble (outside of crypto I mean—that's an entirely different story). Tech (and software specifically) is enormously value creative, and I think it would be very difficult to overvalue that. I think it's normal for market valuations to fluctuate in the short term, but in the long term, I expect tech companies to continue providing enormous value and for markets to continue valuing their stocks accordingly.

binarynate 5y ago
People downvoting, is it due to my comment on crypto? Or is there something I'm missing?
- davidhariri 5y ago
  If I had to guess, it might be this assertion: “I think it would be very difficult to overvalue that” Most people I speak with feel that the market, and tech especially, is overvalued. Put differently, the expectations of returns is so far in the future that they’d rather hold their money back for a nearer term bet.
  - binarynate 5y ago
    Ok, thanks for your feedback
Findeton 5y ago
I don't know. Average PER should be around 15. Netflix is at PER 36 and there are doubts about the sustainability of their future growth. Amazon is at PER 56, and they do depend on margins which will be impacted by inflation.
- waych 5y ago
  PE Ratios are only comparable for like-kinded businesses, and are not indicative of anything on their own. There is no particular value they "should be", and a target of e.g. 15 is only an observed average of past behavior, often blended across many businesses (and therefore not a good indicator of anything). Consider the company that is regularly booking earnings, while another is spending all their revenue (and more) on investing for growth. The first will result in a lower PE, while the second will have a much higher PE all other things equal. Most growth companies are more similar to the latter, rarely booking earnings, and instead often raising capital or taking on debt to continue growth. For growth companies, Free Cash Flow analysis and understanding the balance sheet is typically a better way to understand performance and assess value.

binarynate 5y ago

People downvoting, is it due to my comment on crypto? Or is there something I'm missing?

davidhariri 5y ago
If I had to guess, it might be this assertion: “I think it would be very difficult to overvalue that” Most people I speak with feel that the market, and tech especially, is overvalued. Put differently, the expectations of returns is so far in the future that they’d rather hold their money back for a nearer term bet.
- binarynate 5y ago
  Ok, thanks for your feedback

Findeton 5y ago

I don't know. Average PER should be around 15. Netflix is at PER 36 and there are doubts about the sustainability of their future growth. Amazon is at PER 56, and they do depend on margins which will be impacted by inflation.

waych 5y ago
PE Ratios are only comparable for like-kinded businesses, and are not indicative of anything on their own. There is no particular value they "should be", and a target of e.g. 15 is only an observed average of past behavior, often blended across many businesses (and therefore not a good indicator of anything). Consider the company that is regularly booking earnings, while another is spending all their revenue (and more) on investing for growth. The first will result in a lower PE, while the second will have a much higher PE all other things equal. Most growth companies are more similar to the latter, rarely booking earnings, and instead often raising capital or taking on debt to continue growth. For growth companies, Free Cash Flow analysis and understanding the balance sheet is typically a better way to understand performance and assess value.