Bill,
I think you are suggesting that if Yhoo's ad revenue numbers are only a 1/3 less from the absolute bubble peak, to a "recession" low, that is more strength from peak to trough than one would expect in a cyclical business. I would tend to agree, but I don't think many others will. Also, when you take a 200% compounding growth story and collapse it to a 33% decline, it's no wonder you get a mc contraction of 95%. Such is the way with "growth" stocks.
The great, and often repeated lesson here, and you know I have been saying this for years and years, is that when earnings growth accelerates, pe's inflate right up to the peak acceleration; and when earnings collapse, pe's deflate, until the speed of business deterioration slows. This is exactly the OPPOSITE of what should occur, but the manic-depressive nature of the crowd causes them to expect more and more when things are good, and less and less when things are bad. The simple math of this huge valuation swing creates big rewards for a growth investor with a steady hand. If you blow part of the cycle, you are going to take a brutal beating either in losses or missed opportunity, but it is important to get back in synch with the flow of things as quickly as possible, and leave your past mistakes for someone else to ponder over. |
