No. of Recommendations: 4
If you pay today over 15 times what the earnings turn out to be a decade later, you'll have a poor return with very high probability.
That might be absolutely correct, but I think wasn't the point of mechinv. Instead it was the impossibility to estimate for an individual(!) Tech company what a decade later those earnings might be, based on "average of trailing and forward numbers - - - a plausible estimate of what's going on right now.". That this technique in the world of Tech simply does not work to "measuring a firm based.... on its price to FUTURE earnings ratio--many years out". That it does not work because
you don't know what new multi-million or multi-billion dollar revenue streams they are in the process of unlocking by leveraging their current technology and customer footprint.
That for estimating earnings in X years for Tech other means are required, like (he didn't say that, I do) the "Deep Dive" of tech insiders at Saul's, or whatever. Or simply nothing might work as the future of Tech companies simply is too unpredictable, even for experts.
All that of course does not apply to Tech companies as a group, only to an individual one.
