This time, it’s different.
The bane of every investor.
Space travel, robots, Large Language Models (LLMs), Mythos and Fable 5. We do live in a time of rapid technological transformation.
What doesn’t change? Humans.
Inventors are as prone to be seduced by greed now as they were when a single tulip bulb – the Semper Augustus – sold at auction for an astounding 10,000 guilders in 1637. At the time, that single bulb was thought to be worth as much as a grand, multistory mansion on Amsterdam’s most fashionable canal.
It’s been a scant three months since the market was gripped by greed’s doppleganger, fear. Now, led by a handful of tech stocks, greed is rampant again.
Is this time really different for semiconductor stocks? Micron now trades at more than twice its dot-com peak in 2000, measured by price-to-sales. (Source: Charlie Bilello)
At a price-to-sales (P/S) ratio of 21, it would take approximately 25 to 30 years for an investor in chipmaker Micron to get their money back through profit payout, assuming no changes in the company’s long-term average profitability and payout rates.
Unlike earnings, which can be manipulated through accounting sleight of hand, sales are a little harder to fake.
Sales give you a raw idea of revenue before your accountants monkey with it… interest, depreciation, amortization, cost of goods sold, taxes… and all the other goodies that make up earnings before a company issues a dividend.
With Micron now trading at a P/S more than double its dot-com peak back in 2000, tread carefully. What goes up, well… you know the rest.
That doesn’t mean you have to avoid the stock market – rather, it’s critical to realize tech stocks right now are a trade for speculators. Investors interested in building long-term wealth accumulation should take tech off the table and find the values ahead of the inevitable rotation.
Today’s Grey Swan Pro covers a company with a price-to-sales ratio of less than 0.3 – suggesting deep value. It’s also a strong dividend payer that will keep on churning out income when the chip cycle inevitably turns down — details here.
~ Addison
P.S. If you missed last week’s Grey Swan Live!, be sure to catch the replay with Adam O’Dell: What Comes After SpaceX?
The IPO may dominate headlines, but the larger story involves where capital flows next. Adam explores the AI buildout, energy bottlenecks, hard assets, infrastructure spending and the next phase of The Great Race as investors search for opportunities beyond the most anticipated public offering in history.
