You may be wondering why I am talking about television shows on a blog dedicated to markets, but the Walking Dead was what came to my mind in the last couple of weeks, as I watched Blackberry and Yahoo, two companies that I have posted about before, make the news. While that story may make sense for a lightly-traded, small cap company, I dont see it holding up to scrutiny when the company that in question is the largest company in the world. In September 2013, I posted on Apple in the context of separating your love for a company from your assessment of its stock as an investment, and revalued the stock at more than $600/share. There was little value effect: I revalued Apple, the day after the earnings report, and arrived at a value per share of $648, effectively unchanged from the $649 that I estimated on the day before. In April 2013, I revalued Apple at about $590, after their earnings report, where they surprised markets by announcing both an increased stock buyback and their first debt issuance, well above the stock price of $420 at the time of the announcement. You can use the keyword research tools offered by Google as well as some other units. Blogging is the in thing in todays online world, when each webmaster is trying hard to show up his money site on the web for every keyword entered in the search engine, so posting articles only is not going to solve the purpose. For the rest of the world, though, who have have had to shell out outlandish amounts of money as college tuition and to pay absurd sums for new editions of college text books, I hope that the change delivers much needed good news (and power). In my experience, those who believe that they have power over markets realize otherwise, sooner rather than later. As you can see, the Feds role over the past five decades has been more as a tweaker of interest rates than as a setter of rates, but it is undeniable that the Fed can affect rates at the margin. Looking back, though, I am struck by both how little and how much technology has changed my classes over the last three decades. Is social media over valued? In my view, it not only over stepped its bounds but strayed far from its expertise, which is not valuation. This semester, as in the last few, I will be putting my valuation class online, with nothing held back. If you do nothing but use the information I just shared with you on your own blog, you will be in the clear for creating content for a long time. It it true that some of my ignorance stems from the absence of trustworthy information about the economy but a great deal of it comes from not spending any time on the ground in China. Some of the fundamental parameters (interest rates, the term structure, economy growth) that drive both asset allocation and security selection are affected by Fed policy, with changes creating winners and losers among investors. My first attempt at valuing Facebook was in February 2012, when I attached a value of $68 billion to its equity, with extremely generous assumptions on revenue growth and margins. The first editions of these books were written more than 15 years ago, and I had no choice but to use a publisher, but if I were writing these books today, I would do things differently. With hundreds failing to turn up for their jab appointments many vaccination centres no choice but to close early. With biotechnology companies, making judgments about overall valuation is even more fraught with danger because the pricing of these companies is a probabilistic exercise (dependent upon the drugs that are working their way through the FDA pipeline and their blockbuster potential) and comparing pricing across time is close to useless. Thus, statements about specific sectors, such as those made in the most recent Fed reports on social media and biotechnology, come dangerously close to game interference. If investors believe the Fed, should they be selling their social media and biotech holdings and buying stocks in other sectors?
Registration date April 11th, 2021 11:17 PM EST
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