No. of Recommendations: 3
Nice work.

Having been investing using the Saul method, I see things a little differently.

You pay more for growth. Take Amazon. I don’t own it because it is only growing its revenue at about 30 percent year over year.

As the indexes get filled with these types of companies, you will see much higher prices for revenue.

Here is an example, not necessarily a good one. Telsa vs Ford. Tesla has a crazy high multiple when looked at by market cap to revenue, but Ford looks light it is a Blue Light Special. The difference is growth in revenue.

The problem with looking back, even just ten years is that the indexes are not made up of the same companies, or of even the same type of companies.

Even the companies are not the same. This list includes all types if companies, not just the ones that are growing revenue or for that matter are in the SP 500.

AT&T is now an entertainment company with a telecommunication branch. (Declining revenues)

Amazon is now a Cloud Services company with a retail branch

Netflix is now content creator with a little movie curation.

Tesla is becoming a power storage company with an automobile component.

Dell is a Cloud systems provider with computer retail sales division.

All of these companies are transformed. As the ones that can grow; grow, the ones that stagnate either have less of an influence on the index that they are in, or in the case of AT&T get dropped.

I own too much Data Dog and I will sell some soon. I will sell all of it if its growth rate fell to 70 percent.

This is one reason you are seeing higher multiples on the indexes. Some companies, like AT&T and Ford are selling at decent discount. But who wants a value trap?

Cheers
Qazulight
Print the post  

Announcements

This is a Politics Free Board
Politically charged posts are not permitted on the Metar Board. If you make a political post, and it is alerted, the post will be removed. Thanks!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.