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Price Matters

No matter how much you love a company, Price Matters. It can be the best company in the world. It can even be destined to be the most valuable company in the world. Price is so important.

Here’s a chart for you:

This is AMZN. It went public in 1997 and peaked in 1999 at $106 a share. It took 10 years to get back to that share price. Inflation adjusted even longer. Of course today it is one, if not the top, market cap company in the world.

Today some stocks are pretty expensive. I’m not saying they are in a bubble. But…

TSLA may be the next AMZN…. but at a Market cap of $267 billion and a P/E of 776 maybe it’s a little ahead of itself.

By Christopher Schwarz, ago

A Five Headed Market

Many stock indices have recovered substantially from the lows in March. However, a lot of that is simply due to the largest 5 stocks in the market. (Apple, Microsoft, Amazon, Berkshire Hathaway, and Google)

Here is the average return of the top 5 stocks vs. the Wilshire 5000 return minus those 5 stocks (value-weighted).

Average return of the 5 largest stocks and the rest of the market (value-weighted)

While you have seen your returns go up outside those 5 stocks, you can see you are well below your all time high.

The question is how is this gap made up? Do the top 5 stocks fall? Do the bottom thousands of stocks rally? We’ll see what happens.

By Christopher Schwarz, ago