Jeremy Grantham says stocks could be heading for a ‘melt-up'

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#21
Next you are going to tell me Tesla valuation makes sense! (after earnings catches up with valuation)  Smile

(vested in both Tesla and Shopify at negative PEs)
“If you buy a business just because it’s undervalued, then you have to worry about selling it when it reaches its intrinsic value. That’s hard. But if you can buy a few great companies, then you can sit on your ass. That’s a good thing.” - Charlie Munger
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#22
Yea. Operating leverage is a concept that I'm still trying to grasp. Tesla may be one for me to learn where it is now selling for 355x P/E. To me, earnings have to grow by 20 times more for it to be fully valued as an automaker.

Apple was another stock that intrigued me. I thought at USD $50 it has reached its full value at about the 18 P/E and revenue could not grow further. However Tim Cooks proved otherwise. Earnings have grown 60% while revenue has grown only at 30%. Buying it then, I would be owning a company that is 10 x P/E.
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#23
Agreed. I sold way too early at $42.5 (adjusted for splits).

I think Apple is sandbagging growth rates. People talk about Amazon deliberately sacrificing short term profits for long term growth. I think Apple is deliberately sacrificing short term growth for long terms profit.

What I meant by that is, I think Apple could grow every year at 20-30% if they focus on growing revenues. But that would entails cheapening their brand, and sacrifice the long term margins they can charge. 

Instead, they are very deliberate and selective at every sector they choose to operate in. When they enter a new sector, they make sure they dominate it, in that they can charge a high margin, and get the largest profit share (in contrast to market share). Quite the antithesis to Amazon's philosophy (get as much market share as possible first, then figure out how to expand margins later).
“If you buy a business just because it’s undervalued, then you have to worry about selling it when it reaches its intrinsic value. That’s hard. But if you can buy a few great companies, then you can sit on your ass. That’s a good thing.” - Charlie Munger
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