The most optimistic 2022 earnings per share expectation for Facebook is $4.50. If the stock trades at 20x earnings, the per share value of the social media giant would be $90. If it trades at 25x earnings, the valuation would be $112.50. With the price of Facebook stock now sitting at $114 per share, the business performance of Facebook the company will have to exceed the expectations of the most optimistic Wall Street analyst or the long-term valuation of Facebook stock will have to be north of 25x earnings–one of those must come true for you to earn a positive return on Facebook stock over the next eight years.
You know what I would like to read? A biography of the successful life decisions made by biographers using the knowledge acquired while covering the strategies of other successful people. I have this in mind anytime I read an interview with Alice Schroeder in which she discusses how her intense study of Warren Buffett’s tactics and philosophy have made her a better investor.
Specifically, she has mentioned that early in her career, she would often put up a mental block against purchasing companies that are trading at a higher price than existed when she first studied the stock or first purchased shares. It’s a very human form of mental anchoring. Joseph Steinberg, the founder of Leucadia National, has written that it’s difficult for him to buy a $10 hamburger because he remembers being a kid when it cost $0.10.
VWEHX, the Vanguard High-Yield Corporate Fund, has been a great to investors since its inception in December 1978. VWEHX has generated 8.41% annual returns durings its thirty-two years in existence, which would turn a $10,000 investment into $146,000 over that time frame. Better yet, VWEHX has been the near perfect bond fund to own if you are after high current over the long run, as $108,000 of those gains would have come from income generated from the bond holdings that would be passed on to you.
Gilead Sciences caught my attention in February when the price of the stock fell to $82 from its 2015 high of $125 per share. I wrote it about it then, likening the anxiety that was dragging down the price of pharmaceuticals to the anxiety that dragged down the price of weapons manufacturers Lockheed Martin and Boeing during the political talks of sequester.
Gilead, whose signature drug is Sovaldi, has come under scrutiny for pricing its Hepatitis C drug at $1,000 a pill or $84,000 for a three-month regimen. France, Spain, and India have threatened to invalidate Gilead’s patents for Hepatitis C, and the Veterans Administration in the United States has sought to add political pressure to Gilead’s American operations by using media pressure and the threat of congressional regulation to get Gilead to voluntarily the price of Sovaldi.
Middle-aged Midwestern farmers did their part during WWI by dropping significant chunks of their food off with local U.S. government food officials that transported the food to the Allied Cause in exchange for Liberty bonds. A liberty bond was exactly what you think it is–a low-interest bond that was created by the United States government to facilitate borrowing to fund the war effort.
It was heavily marketed as a patriotic duty, with movie stars like Douglas Fairbanks and Mary Pickford rallying the public to delay gratification and accept as any bonds in lieu of cash as was possible to survive, and Liberty bond posters decked the local churches and government halls.