Re: Google.
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He's saying that GOOG in 2005...
Is a lot like MSFT in 1987.
MSFT went public in March 1986...
At $21.00/share...
And was bid up to $27.50 on first day of trading...
Roughly 20-25 times earnings.
In 19 years...
MSFT stock has increased in value 300 times...
Which is a 35% annualized return..
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Google is likely not at all like MSFT in 1987. GOOG is already worth $82 billion. I believe the biggest stock today is GE at ~$400 billion. If GOOG were to increase in value 300x, then it would be worth $24,000 billion ($24 trillion?). Not gonna happen in our lifetimes.
GOOG may well become the biggest company on Earth, but expecting anything like a 300x gain from here is crazy. A 10x gain from here would make it twice as big as GE. That would be the uppper, uppper end of my expectations if I owned it. And I wouldn't expect that for at least 10 years.
GOOG will soon run into the law of large numbers and it's growth will slow way down. That doesn't mean it's not currently a good investment, but it does mean that you won't see anything like the return investors who held MSFT in 1987 saw. To get a MSFT-1987 like return you should be looking at companies worth less than $1 billion.
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Excellent point. Welcome to the boards.
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