RE: Why Price-To-Earnings Ratios Are Less Meaningful Than In The Past And Will Be Even Less So In The Future
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I see where you are going with this. However I think PE is still a valid metric when applied across a group of established tech companies as opposed to younger smaller tech companies.
Remember when comparing a group, even tech like Apple and Microsoft, as Buffett likes to say, price is what you pay, but value is what you get. IOW a company that earns a dollar, earns a dollar whether you pay 10 per share or 30.
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That's correct. But what if that company has been aggressively buying back its own stock?
Stock buybacks are a "double edged sword" (as we say meaning can be good or bad depending) As with any use of cash you hope management is acting prudently and buying back at the right time. People often sight the airlines as an example as acting poorly by buying back stock before the pandemic. Of course a global pandemic is not easy to foresee LOL.
Sure wasn't easy to foresee. Who'd know a Chinese lab would let loose the virus right then. :)