Hiring Investment Managers Hobbies

Historically Investing in Tech Companies

If you look at Cisco, Intel, Microsoft, Oracle or even a Google, there are so many forces working on hammering at their core business. And many of these upstarts have a much lower cost structure. Trying to handicap those odds is difficult. Plus, you are paying some ridiculous price-to-earnings multiples and there is no margin of safety for these companies. It's very hard to get tech businesses which have value prices -- 5 to 10 times cash flow. Instead, they are going for valuations that seem to indicate that for decades on end, they are going to continue to dominate. And that is just not the way things work in tech. Looking far out in the future with a tech company, things get very murky. It's very hard to handicap. You know there was a time when DEC or Wang were invincible. But they were wiped out and smaller tech businesses often have even less staying power.