Are you paying too much for tech stocks?
Mining companies have traditionally traded at a discount to industrials due to the limited life of their assets. It's like valuing a melting ice cube – here today, but gone tomorrow. Years ago, healthcare companies used to attract large premiums due to the excess cashflows they produced, but once their patents expire, they too become like melting ice cubes.
Today, technology firms are likewise attracting large premiums based on forecasts of growth in perpetuity. But could the tech leaders of today be the AOLs and the Yahoos of tomorrow?
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