Good Points. I just raised our cash level from 10% to >20%. If the market keeps moving higher then we’ll still participate, just not as much. And if it weakens: dry powder! … Regarding lofty tech stock prices, your readers may want to look at the MSFT high price in 2000 and how long it took the company to beat that old mark. I think it was 2016 before it hit new highs. The company did fine during those 16 years as far as revenues and earnings went, it just took a while for them to catch up with an absurd stock price. A reasonable person could argue a lot of tech companies today are on the same footing as MSFT in 2000. On a happy note, MSFT is up 5-fold or 6-fold since that new high in 2016. That new high was a buy signal.
You bring up good points here. Following dotcom, there was a secular shift from growth to value born out of the bear market in the early 2000s. I think it is reasonable to say that the new technology that many people find exciting today will take some time to flow through to top-line revenues and eventually cash flow, which is in line with what you are saying about the 16 years that it took to catch up with the stock price.
To your point about MSFT in 2016, that new high in 2016 came at a period of time when economic growth was re-accelerating following the short 2015 bear market and growth deceleration. The buy signal could also be attributed to an accelerating economy and the fact that the market was still in a long-term secular bull. I would argue that the condition set currently is much different than in 2016.
Good Points. I just raised our cash level from 10% to >20%. If the market keeps moving higher then we’ll still participate, just not as much. And if it weakens: dry powder! … Regarding lofty tech stock prices, your readers may want to look at the MSFT high price in 2000 and how long it took the company to beat that old mark. I think it was 2016 before it hit new highs. The company did fine during those 16 years as far as revenues and earnings went, it just took a while for them to catch up with an absurd stock price. A reasonable person could argue a lot of tech companies today are on the same footing as MSFT in 2000. On a happy note, MSFT is up 5-fold or 6-fold since that new high in 2016. That new high was a buy signal.
You bring up good points here. Following dotcom, there was a secular shift from growth to value born out of the bear market in the early 2000s. I think it is reasonable to say that the new technology that many people find exciting today will take some time to flow through to top-line revenues and eventually cash flow, which is in line with what you are saying about the 16 years that it took to catch up with the stock price.
To your point about MSFT in 2016, that new high in 2016 came at a period of time when economic growth was re-accelerating following the short 2015 bear market and growth deceleration. The buy signal could also be attributed to an accelerating economy and the fact that the market was still in a long-term secular bull. I would argue that the condition set currently is much different than in 2016.
As always, very informative
Thank you!