Love your commentary, I have to say. That chart with real free cash flow. Could you explain exactly what you mean by cash flow as it pertains to tech stocks? Also, interesting that the last time this metric was negative was in 1999 and early 2000.
Thanks! Cash flow essentially starts with earnings but then adds back non cash accounting items like depreciation and subtracts changes in working capital and capex. Cash flows for large cap tech stocks are quite strong but inflation is pushing real yields down.
Earnings is a good long term guide but many analysts also look beneath the hood at cash flows. I think it's important to look at a variety of measures to determine the health of a company. I also look at revenues and gross margins, for example.
Love your commentary, I have to say. That chart with real free cash flow. Could you explain exactly what you mean by cash flow as it pertains to tech stocks? Also, interesting that the last time this metric was negative was in 1999 and early 2000.
Thanks! Cash flow essentially starts with earnings but then adds back non cash accounting items like depreciation and subtracts changes in working capital and capex. Cash flows for large cap tech stocks are quite strong but inflation is pushing real yields down.
I see. Would this not then mean that any increases in the price of the stock based on earnings might be somewhat misguided?
Earnings is a good long term guide but many analysts also look beneath the hood at cash flows. I think it's important to look at a variety of measures to determine the health of a company. I also look at revenues and gross margins, for example.