Things always change

I have no crystal ball, but things always change. And even if a business doesn’t change, investor perception of it does, and that moves markets.

Wise words from Dan Caplinger. We on this board rightly look at business performance – and for many great companies, it hasn’t changed…or maybe it’s even getting better and better. But most things are not as cheap as they were a year ago. That doesn’t mean 2018 won’t be as amazing as 2017. But there is evidence that 2018 isn’t as set up to be amazing.

In 2016 Saul often talked about a coiled spring. Basically, sentiment was pretty negative, on growth (Saul) stocks and on the market in general. Now the spring isn’t so coiled.


Ticker     Dec16 PS       Dec17 PS
SHOP         11.1           17.2
SQ            7.4           14.9
ANET          6.5           11.4   (PE: 31.7 then, 47.8 now)
HUBS          6.7            9.5
LGIH          0.8            1.5   (PE: 9.1 then, 17.4 now)

Just a few examples, but you get the point. I say this not to bring doom or gloom: not at all! I’m still fully invested and plan to stay that way. Short term fluctuations are unpredictable and as long as company performance persists, the long run is intact.

But make no mistake: stocks can fluctuate wildly down just as they can shoot up. It can be enough to prevent appreciation for several months or even a year. As a matter of fact, I think that’s where Wix is right now: the spring on that one may in fact be coiled.

Bear

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