I’m always impressed and humbled by those contributing to my blog comments. And that’s why this post is asking for your feedback and opinion directly on a single question.
Speaking to a group of university students, Bill Gates said:
“I think the [earnings] multiples of technology stocks should be quite a bit lower than the multiples of stocks such as Coke and Gillette because we are subject to complete changes in the rules.”
His biggest holding, Microsoft is trading about 30% lower than the S&P 500, currently. This pricing probably aligns with Gates’ philosophy.
But Apple computer is 46% more expensive than the average S&P 500 stock.
Which statement has the highest degree of certainty?
That Apple computer will have higher earnings in 2020 than in 2010 – or that Colgate Palmolive will have higher earnings in 2020 than they do today?
And do you agree with Gates?
Should Apple have a lower PE ratio than a business like Colgate Palmolive?