Interesting, FPhil, I had no idea how that board was run. My post was deleted. What a strange way to think about markets, communication and learning. It’s not very “Foolish,” and really quite foolish.
To the point of SaaS and market valuations (and addressing Rob): I have been in business all of my life. The holy grail is recurring income with little added expense. These companies seem to have only half of the formula. AMZN ran without profit for a long time, and I honestly don’t see where exactly profit in the sale of products and delivery is (ever higher sales, ever higher sales expense). I believe it’s business segments like AWS that make the company profitable.
To Rob’s point that this time is different; sure DDOG and CRWD have real income when many in the dotcom bubble did not. But I see, for instance, Instacart from “underneath” (I understand and live with the same underlying costs in my own business) and that is a completely insane model. I have no idea how many of the others are built upon similar sand but I bet it’s more than a few.
That said; there is a difference in the markets that is profoundly fundamental; greater participation as more average Americans sign on to their company 401ks and the growth of passive investing through ETFs. I think that the ETFs must anchor prices to a large degree on the sell side which creates greater influence on the buy side (tending to push prices up). This could be plainly seen in the Archegos situation where Hwang was piling into a few names and pushing the prices up. Also instructive is the GME trade. If everyone has “diamond hands” then the stock can either stay where it is or trade up. What I don’t get is that volume has remained relatively high and there can not be volume without sellers.
Regarding Saul and his board, I read his post last night telling us all how he’s still quite ok and vastly outperforming the market. He may well be, but what is never different: “everyone is s genius in a rising market” and when selling begins in earnest it all collapses in a hurry. Never forget the time element in investing. When you start and end your measurement matters.
I don’t think this market is anywhere near it’s bottom. If things are different, it will trade at these high valuations forever with occasional “corrections.” I just hope they aren’t different in this way. If that’s true, then I have aged out of the market. I’m ok with that, but I’d like to have one more crack at being brave when everyone else is fearful. That’s a market at least 50% lower than where we are. I started this with ZM. I like ZM. I like the story and I think it’s correct in the long run. But ZM is not disconnected from the greater whole and if the market corrects 50%, ZM will drop, too, and perhaps 50%. We have to remember that if valuation models return to something normal-ish, then a company with $1 TTM earnings but sells for a P/E of 100 will drop 75%. “The Market” is an average, so some names will be much worse and some not as bad. The best companies, not so bad is where the value will be. That may well be DDOG and CRWD, but I suspect that when the tide goes out we’ll see some things not quite so obvious now.
I’ll leave with this: I think my very best investment idea at this moment is to buy AARK…when it’s at $50 or below. I’ll let Cathy do the hard work of understanding what I am too old to get.