yes Microsoft looks reasonably priced when compared to the Market (say MCD)
but when you compare Microsoft P/E today vs 4 years ago you should take a look and
see if microsoft's earnings are pretty much supposed to double? in fact Microsoft has a lot of headwind.
they are switching from licensed product revenue to reoccurring revenue. in the long run they will probably do a little better.
but in the short-term there is a lot of uncertainty about their ability to replace veining windows, office, server, ... revenue with reoccurring revenue from Microsoft Azure platform.
anyway Microsoft is a real company. it is making real money. it deserves to have a high P/E. but that P/E number of years ago was 14. Google;s P/E was 30 because thought it might change the world.
I can't see anything wrong with Google and Microsoft individually. on a relative basis they have stronger business than majority of businesses out there.
but you can't help but look at the market and see that it just keeps going up. even for companies like YUM.
then you turn on the radio and there is an Ad for "Learn how flip house this weekend seminar".
at least where I am living, housing expenses has doubled in the past 15 years. Cost of education has gone way up.
food has become more expensive. but I don't notice people making even 30% more than they used to. let alone 50% more or 100% more.
I will give you an anecdote. a bartender that works near my house. gets irregular hours. she gets at best 35 hours a week.
she and her boyfriend together bought a house for 200k way outside the city limits of my town.
everyday she Drives 45 minutes on a highway that has No Traffic to get to work.
when the economy turns down i know this lady wont be able to make her house payments.
there are so many americans who are living pay-check to pay check. if their car breaks down.
they don't have the ability to pay for that broken suspension or whatever. they will have to rely on financing
thus the whole industry you see that now place like FireStone, NTB, pepboys offer financing when you get your car done.
I have never ever before seen so many pawn shops and pay-day loan shops.
again, I am not claiming the economy will crash tomorrow. If I knew that for a fact.
I would be crazy not to sell everything i have and just short the market.
but it has been 9.5 years since the last recession in the U.S. and one can't help out and wonder why we haven't got one yet.