Nasdaq Shines As Stocks And Virus Remain Hot

The formation of much of civilization began with farming.  At its inception, clearing massive fields to plant crops which will yield something to eat months later was tough.  It still isn’t easy, and it certainly requires faith and patience.  Of course, modern farming has changed a great deal over time, and much of the industry has consolidated as you need scale to effectively compete. 

Agritech is an emerging field which offers quite a bit of promise as the various different elements of farming offer plenty of opportunity to become more efficient.  The use of big data to make more effective use of land, water, seeds, machinery, and people is an area to investigate.  It certainly is Amazon-proof, so it has that going for it.  An interesting aspect of farming is applicable to investing.  There is a season for planting, and there is a time for harvesting.  Each is related and dependent on the other season.  A good planting results in a fine harvest, which leads to more capital that can be deployed (more land, workers, crops, etc).  In thinking about the current situation in the investment world, I am of the opinion now is a time to concentrate on your planting, especially if you have had any recent success which allowed for plentiful harvests.

 

The market environment is currently is quite unique.  The divergence between the performance of growth stocks and the lack of appreciation of value entities has probably never been wider.  If you look at the multiples of growth type investments (Tesla, Amazon, Shopify, Zoom, Wix, Apple, Microsoft, Facebook, Adobe, Salesforce, Okta, Servicenow), they value businesses at levels where many years of future growth is assumed.  Companies which have not performed for quite some time are valued in a way where they are believed to have no future growth, or possibly worse, that the business should be liquidated. 

Those who prefer the growth entities are making the assumption that the next ten years will be similar to the last ten.  Investors who prefer the cheaper companies are potentially buying something which may shrink or are in obsolete industries.  One of the long-held principles of finance is reversion to the mean, where history shows that extreme results eventually move towards their usual, or average, outcome. 

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Disclaimer: Thanks for reading the blog this week and if you have any questions or comments, please email me at information@y-hc.com. Y H & C Investments, Yale Bock, and the family of Yale Bock ...

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