AFMC - Connecting The Critical Nodes
2024-07-03 05:10:00 ET
Summary
- Crescat is a global macro asset management firm. We develop tactical investment themes based on proprietary value-driven models. Our mission is to grow and protect wealth by capitalizing on the most compelling macro themes of our time.
- Many will argue that underlying fundamentals are much stronger for the leading tech companies today than we were at the peak of the 2000 bubble.
- If fundamentals are unusually strong, shouldn't we suspect the potential sustainability of this condition?
Cisco Systems ( CSCO ) was the most valuable company in the world at the peak of the dot-com bubble in March 2000. Its stock price had reached a high of $80.06 per share giving the company an enterprise value ('EV') of $548 billion or 5.5% of US GDP and 37 times sales. Investor exuberance over tech stocks was high. The future economic promise of the Internet for the world economy was strong, but the forward earnings growth rates implicit in tech stock valuations were not achievable. Stocks had overshot. Tech earnings were getting ready to inflect sharply downward in the course of the normal business cycle. Cisco's stock price would fall 89% over the next two-and-a-half years. The stock price has yet to return to its prior high in the 24 years since....
Connecting The Critical Nodes