Author Topic: Which Tech Giant Would You Drop?  (Read 5650 times)

clutch

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Re: Which Tech Giant Would You Drop?
« Reply #20 on: May 14, 2017, 03:03:52 PM »
So the summary is:

Pretty much nobody on CoBF cares about FB.

Apple fans would drop MSFT close to first. Microsoft users would drop Apple close to first.

Most people think AMZN and GOOGL are close to irreplaceable.

Hence I own AMZN and GOOGL. :D


Uccmal

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Re: Which Tech Giant Would You Drop?
« Reply #21 on: May 14, 2017, 04:02:31 PM »
Following this thread with interest. 

What is interesting to me is that MSFT is trading at 530 B market cap today.  It reached 600 B thereabouts 17 years ago.  Accounting for inflation it is maybe 40% cheaper than at that time. 

To me that kind of shows us the expected returns from this basket of stocks going forward for the  next 17 years.  But then I have felt that way about everyone on this list, expect MSFT for the last few years, so what do I know? 
GARP tending toward value

Jurgis

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Re: Which Tech Giant Would You Drop?
« Reply #22 on: May 14, 2017, 10:16:23 PM »
Following this thread with interest. 

What is interesting to me is that MSFT is trading at 530 B market cap today.  It reached 600 B thereabouts 17 years ago.  Accounting for inflation it is maybe 40% cheaper than at that time. 

Totally not fair. PEs and P/FCFs are not even comparable to the top of tech bubble. (Oh, yeah, AMZN... one out of five... is that your example of the bubble?)

Quote
To me that kind of shows us the expected returns from this basket of stocks going forward for the  next 17 years.  But then I have felt that way about everyone on this list, expect MSFT for the last few years, so what do I know?

The problem with 17 year bets is that even tech giants may not survive 17 years of creative destruction. But then KO and BRK might not survive it either. So... I won't take a bet on 17 years. But I would take a bet for 10 years and against practically any company you choose (including BRK) if I can choose any subset of the five. 8)

I would not take 10 or 17 year bet against index though.
« Last Edit: May 14, 2017, 10:18:01 PM by Jurgis »
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gjangal

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Re: Which Tech Giant Would You Drop?
« Reply #23 on: May 15, 2017, 05:49:28 AM »
From a bubble perspective , these situations are not comparable atleast to GOOG. This made me go look for some
context at that time . Valuations today are not cheap, but they are not 2000 levels

MSFT  for year 2000

Net cash : ~ 20b
Net income: ~ 10B
Rev growth: 25%
PE at 600B:  ~ 60
Interest rates: Higher than today


Uccmal

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Re: Which Tech Giant Would You Drop?
« Reply #24 on: May 15, 2017, 06:11:54 AM »
Jurgis and Gjangal,

I didn't use the word bubble. 

From an investment perspective which is after all what we are doing here, can you show me how any of the companies on the list will grow greater than single digits going forward.  In other words, the best days for their STOCK price growth are behind all of them. 

It may not be a bubble situation but they are certainly all more than fairly valued. 

GARP tending toward value

Jurgis

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Re: Which Tech Giant Would You Drop?
« Reply #25 on: May 15, 2017, 07:08:18 AM »
Company-specific analyses are posted on respective stock threads. You are welcome to discuss your assumptions and challenge models by others there. I don't think this thread should engage in specific stock valuations and predictions.

I am quite conservative in my models and I don't see a point of posting optimistic predictions, so personally I'm not gonna try to persuade you or anyone else about "greater than single digits going forward". But then I would not do that even for BAC @ $12 or BRK at 1.2 book or any other situation that you might think is very cheap.

Take care.
« Last Edit: May 15, 2017, 07:10:05 AM by Jurgis »
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gjangal

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Re: Which Tech Giant Would You Drop?
« Reply #26 on: May 15, 2017, 07:32:31 AM »
Shouldn't have used the word bubble myself, what i meant to say was that the comparison to 2000 valuations doesn't hold well.

- In my opinion i see atleast FB, Goog and amzn growing double digit revenues the next five years. Whether you ll get a double digit return holding these depends on a lot of factors. AMZN is just crazy valuations

- Interest rates, whether they are low or not.

- What do they do with the amount of cash on their balance sheets. At 11-15% rev cagr google will have 250B in cash if you look out 5 years, around 35-40% of mktcap in cash maybe abut less depending on a tax haircut. I see google and FB controlling atleast 40% or 50% of global advertising budgets due to their dominance.