- If we’re going to use valuation metrics to make important financial planning and investment decisions why wouldn’t we use the most reliable metrics at our disposal?
- The Price/Sales ratio has a much higher correlation to actual subsequent returns than Price/Earnings.
- Price/Sales, and other reliable metrics, indicate the U.S. stock market is more expensive than it’s ever been in history.
Continue reading “Price/Sales is Better Than Price/Earnings…for forecasting future returns”
As just one illustration of what’s taking place in this market, Tesla stock gained over $115 billion today (yes, billion with a “B”) on the news that Hertz has placed an order for 100,000 vehicles over the next 14 months totaling about $4 billion in revenue. That’s almost 30x the one-time sale! Not earnings but SALES!
Put another way, Tesla added two entire Ford Motor Company’s in a single day (based on $60+ billion market cap)! Ford sells over 4 million vehicles worldwide each year and, yet, Tesla stock increased by two Ford Motor Company’s (equivalent to 8 million cars annually) in a single day on the news of a 100,000 one-time fleet sale over 14 months.
Christopher Bloomstran points out, “As of today, $TSLA is valued above the entire global auto industry, PLUS Uber, Lyft, Progressive, GEICO (if public), Allstate, Duke Energy & Dominion Energy.”
To put that in perspective, understand that there are about 74 – 78 million cars sold globally and Tesla sells about 1 million of those yet Tesla is valued more than the rest of the entire global auto industry combined. Continue reading “Unstoppable Tesla”
Often a new economic boom begins when things couldn’t get much worse. High unemployment, high inflation, low / negative growth, and stagnant / declining asset prices all contribute to a feeling of misery, which is usually the prevalent emotion at the bottom of a bear market or economic cycle.
Continue reading “Then vs. Now. The Beginning of A Long-Term Cycle vs. The End of One”