Its Over, page-23044

...this is why it is important to understand Where We're At

...expensive quality stocks can only remain as expensive as they are as long as buyers are prepared to pay for them at those prices, and when they don't, mean reversion process takes hold. At some point, they can no longer maintain lofty growth expectations of the market. And we saw that with Google last week which delivered and beat expectations yet was not good enough.

...in today's market, market participants pay less attention to valuation and business fundamentals and more focus on momentum, sector narratives and money flows. But Valuation matters eventually. Droneshield just showed that the past week. Market can accord a $2B valuation well ahead of delivery, only on pipeline and "promises" on a Powerpoint.  People were just chasing the gravy train, they weren't looking at valuation relative to delivery. Until someone pointed out so.

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What if I told you that rampant accounting chicanery has inflated mega-cap tech earnings by the largest degree in modern history? And that if you price these companies on a free cash flow basis, they're more expensive than what we saw at the peak of the Dot Com mania?

Consider the case of $MSFT, which is currently trading at a 53x FCF multiple, or more expensive than the 40x FCF reached in 2000:

https://x.com/Ross__Hendricks/status/1817219473537183819