Ghost of Igloi wrote:
price to sales ratios are one of the best, and most under-rated valuation measurements.
the problem is that comparing companies across industries like this graph does...doesnt' make sense.
The spx is much more tech dominated than in the past...and tech companies deserve much higher price to sales ratios than old line industrial companies.
So it's not a surprise that price to sales ratios have gone up as tech has become a larger part of the index.
This is one of the many problems of leaning too hard on valuation...it's not apples to apples over decades, so the message you think you are getting...is inaccurate.
that is a very good point.
Any thoughts on all these anti-trust investigations against the big techs (i.e.: Google today)? The market just seems to shrug it off, like it was priced in or something. I seem to have heard that they would potentially be worth more if broken up....