To consider: The performance of high P/E technology companies
To consider: The performance of high P/E technology companies. As an example, during the month Amazon fell nearly 10% following a result that highlighted skinny margins of just 0.7%, falling from 1.8% in 2011. Amazon currently trade on 475x earnings, surprisingly not excessive in this sector. Brand-name recognition is imperative in building a competitive advantage on the internet as other barriers to entry are low. In this environment, any business generating high margins should logically have them competed away, or at least challenged. We are certainly not suggesting avoidance of the sector as there are many quality businesses, just that care is required. Our monthly newsletter is available here: (VIEW LINK)
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