Now you may think it's cheap based on future growth but a lot is riding on the return on growth capital being spent.

But isn't that always the case. Or at least for more than the 20 years the company has been public.

Consider the 20+ years of being publically traded as 20+ independent(ish) experiments. In most of those years PE was high, 30ish or so mostly. In every one of those years you would look at that high PE and look at how much they were compensating their employees through SBC and other mechanisms. Come up with your analysis of what the SBC was "really" costing them. And then someone could say "Now you may think it's cheap based on future growth but a lot is riding on the return on growth capital being spent.". 20+ times they could have reasonably pointed that out.

And then, two or three years later look back and see, even adjusted for inflation, that the company was worth, on average, 75% more than it had been worth three years earlier. On trend line anyway, some ups and downs around that value, but compounding says 20% real CAGR averaged over 20+ years.

And if you are data driven you would say: "well I guess we have our answer, the return on growth capital over the last few years has been FANTASTIC."

And then, of course completely reasonably, someone could point out, "yeah but that doesn't mean its going to keep doing that. A lot is riding on the return on growth capital NOW being spent.".

And then someone like me comes along and says "you know we've done this experiment nearly 20 times, lets say 17 times and give ourselves a lookback of 3 or 4 years. And 17 different times you could say "well I guess we have our answer, the return on growth capital over the last few years has been FANTASTIC.".

And then someone could say, "but past performance is no guarantee of future performance.".

And then someone like me will come along and say "sure. right. tautologically. But isn't past performance precisely exactly the best possible evidence we actually have of what will happen in the future?"

So yes, you are right, as always. We don't know the future and future performance depends on what happens in the future.

But I think we have a fair amount of reason to use past performance to tell us how we should bet.

To be fair I don't think you are wrong. I'm just wondering why we have to keep pointing out that we don't know the future on the investments we find ooky but we are free to leave that implicit when talking about the investments we agree with.

If you are invested in anything you are betting on an unknowable future. And past performance is the best information we have in determining how to bet on what the future will be.

R: