Do you make any adjustment on the PE evaluation, particularly for the top 4, in light of all the ways reported earning can be manipulated. I have not looked but would you have the same list if looking at things from a revenue based valuation or a free cash flow valuation?
When I mentioned p/e ratios, that was just a hasty simplification, not a description of how I generated the list. I looked at a variety of indicators, including free cash flow, revenues, forecasted earnings, and dividends. For Amazon and Salesforce, GAAP earnings imply extreme overvaluation, but are a bit misleading, and free cash flow provides a better measure (they still look overpriced, but not dramatically enough that I’m eager to short them). For the other 4 that I listed, p/e ratios look about as informative as the other measures.
Do you make any adjustment on the PE evaluation, particularly for the top 4, in light of all the ways reported earning can be manipulated. I have not looked but would you have the same list if looking at things from a revenue based valuation or a free cash flow valuation?
When I mentioned p/e ratios, that was just a hasty simplification, not a description of how I generated the list. I looked at a variety of indicators, including free cash flow, revenues, forecasted earnings, and dividends. For Amazon and Salesforce, GAAP earnings imply extreme overvaluation, but are a bit misleading, and free cash flow provides a better measure (they still look overpriced, but not dramatically enough that I’m eager to short them). For the other 4 that I listed, p/e ratios look about as informative as the other measures.