I was simply trying to point the unique lock that Microsoft has brought to the table.
i have no argument with that...i look on the IT world as a "Sierra Madre Economy". this was coined a few years ago in Foreign Affairs or somewhere to describe economic situations where the winners get all the spoils, including the "deferred earnings" of the losers (they took the name Sierra Madre from the movie about the gold rush).
examples of Sierra Madre economies include actors and sports stars and musicians (except opera singers, who are all above average). basically, you have a lot of people making no money trying to do the same thing as a few people making a lot of money. people criticize the salaries of the celebs and sports stars, but they kind of make sense when you see them as collecting the uncollected wages of the entire labor pool targeting those scarce positions. just like a large labor pool targets the mother lode of the Sierra Madre, but only a few strike it rich (forgive me if i've got the original thinking of the article bassackwards--it's been a few years).
in any case, MSFT is the Michael Jordan/Britney Spears/Madonna/Tiger Woods/Tom Hanks/etc.etc. of the IT world. there are a few Scottie Pippins out there, but most everyone else has a "day job". in the real economy, these people (companies) would have "transit jobs" as waiters and such at Il Fornaio and Spago as they try to "arrive". that is to say, if the stock market were like the real world, most IT companies would be priced to match the reality of their not being stars yet....
but in the bubble economy that persists today, every two-bit MSFT wannabe is priced like they have already arrived. it is as if you got paid $10 million just for being an aspiring actress/waitress at at a trendy LA restaurant. to me, this trend is inconsistent with the laws of the Sierra Madre Economy, and i consider it unlikely to persist indefinitely.
find it difficult to imagine that value investing - over time - has outperformed Intel, Cisco, Microsoft, Oracle, Siebel, etc... from their early days
sorry, but this is just post-hoc cherry-picking...those companies, which were winners in the Sierra Madre Economy, were great investments early on precisely because it was like signing up for a lifetime share of Robin Williams' earnings while he was still schleppin' comedy clubs for 35 bucks a pop back in the early 70s. the difference nowadays is that everybody (including those who haven't really arrived) is priced so much higher. |
