Regardless, in effect you are willing to pay a multiple of earnings, a multiple of sales, and so on, and so forth, when you buy the equity of any company, whether it be one, one-hundred, or one-million shares.
When I buy a share of equity in a company, it has no serial number, it is not a share of equity differing from the first or last authorized to trade. They all trade at the quoted price at the moment I make my purchase.
You will discover, as you begin to price companies with similar businesses, that many will reflect similar market-caps., p.e.s, and other measures of value consistently in time. They all go up and down in valuation during secular moves in the economy. We are now approaching the back-end of the zenith in just such a secular move.
Each generation performs the same rituals of growth in much the same fashion. The "boomers" time now is not much different than their parents place in history between 1969-1973. In fact, were that not the case, styles of dress, social-attitude, political trends, and even solar activity would not appear as they do now. They should be markedly different than anything heretofore known. Alas, they are not.It requires little more than a stroll down main-street to confirm what has already been extolled in popular history over, and over again.
Few realize that the radio, a remarkable device for communicating, selling, in 1928, is no less a revolution from what had till then existed, as is the Internet today. Both were methods for broader and faster communication than ever could have been imagined. Yet, Radio Corporation of America (RCA) at $732 in 1929, fell below five-bucks in eighteen months. The lesson is, that while a revolution indeed, indeed all were aboard to enjoy it soon after, with no special competitive advantage left to anyone. Same with the railroads, automobile, television, the mainframe cmptr., etc.
Were their only one generation of man ever to exist, their would only have occurred one market frenzy, and one market crash. The lesson would never have been unknown in man's being to be repeated. But you may claim, we know enough not to repeat it. But knowing history is never enough when it is the third-generation so removed from the original event.
Terrence |
