The US market is pricey. The kind phrase used to all those lng is, ‘priced to perfection.’ What kind of perfection that is, does not get explained.
So, I admit it, I come from a stock environment where 1 times sales is the norm for a solid boring company, 1.5 a strong ratio, 2 a trifle steep and where only the superstars of sizzle get a x10.
That’s not a 20x, 40x, 70x or the 100x of a Palantir.
Now you might say, it is what it is, and as an investor I’ve been fighting that idea for a very long time but to no avail, the Nasdaq refuses to crash to relatable values. I’m fine with that, nothing better for me than a bull market.
Here is the chart I look at in and with wonder.
My position here has been the Nasdaq is either at the end of a boom and going into a bubble or is in the early stages of a bubble. The top we are looking at tends to suggest I’m wrong and we have had the top. However, corrections in a bull or bubble are common so I’m not giving up on the bubble yet.
However…
There is a factor that only occurred to me just now and its kind of jaw dropping or as a Brit would say ‘gobsmacking.’
Here it is a table of large US stocks by market cap per employee, first 6 high in the variable, the next 6 ‘normal.’
Now it’s the Nvidia number that gets my attention, its worth $148m an employee.
Even $22m at Apple is mighty. When they hire someone it adds $22m to the companies value.
As an aside, you might say Walmart pays its average employee 10% of there share of marketcap. $500000 marketcap per head, $50K a head average wage (don’t forget the managers.) If Apple employees got paid Pro-rate with that, an Apple employee should be getting $2m a year and an Nvidia-ista well over $1m a month.
Of course that’s not happening. I think!
The point is, can a company in the US like the top six have $20m of market cap per employee when normal massive corporations have less than a million of market cap per head. One group must go up or one must go down and yes we know how that can work the ‘wrong way around.’
However its sobering. It worth dwelling on. It means something for valuations.
To me it says those companies are way to high and that has implications for the market. However Km not going to fight it.
Why?
Because of course, this time its different. Oh wait….