Dec
24
Big Shift, from Jeff Watson
December 24, 2009 |
Did it ever occur to you that the world's largest advertising agency, Google (GOOG) has about the same market cap — $191,847,475,750 – as General Electric (GE) – $197,617,213,440? There are great societal implications in this, and many market analogies on shifts of priorities.
In the futures markets, 50 years ago all of the action was in the agricultural products, forest products, livestock, and foods. Today, the ES contract is as big, or bigger than the entire grain futures market put together in total volume. I wonder what the biggest item traded in 50 years will be?
Jeff Watson, surfer, speculator, poker player and art connoisseur, blogs as MasterOfTheUniverse.
Marlowe Cassetti comments:
Scott Brooks writes:
Based on the current attacks on technology and advancement by the Climate Change Crew and their statist counterparts, I'd bet the main traded items in the future are going to rhyme with those of the past. Agricultural, livestock and foods.
Ignoring technology and the "Mind of Man" as the solution to our problems and pushing us backwards in our lifestyle will result in the past being our future.
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As one diciphers Mr. Market's meaning, one shouldn't neglect to consider Total Enterprise Value as well. GE's TEV is $576.4 BILLION whereas Google's TEV is $174 Billion. (TEV includes the value of outstanding debt, of which GOOG has virtually none.) GE's 2008 Net Income was $17.4 Billion whereas GOOG's 2008 Net Income was $4.2 Billion. They have similar returns on equity.
I note that Google could not exist without General Electric's products, whereas the opposite statement cannot (yet) be said to be true.
In my way of looking at things, the stock investors who paid 50x earnings for GE in 1999 are probably the same folks who are paying 30x earnings for GOOG today. What does this predict about the future? It suggests that Amazon will soon sell a Kindle version of the classic book, "Where are the Customers' Yachts?