This one weird trick might cost your retirement fund billions

Part One: What’s a company worth?How much would you buy a company for? Ten times what it made last year? A hundred times what it made last year? A thousands times what it made last year? Microsoft’s $3.1 trillion market cap is about 25 times what it made last year; Google’s $4.6 trillion market cap is about 30 times what it made last year.A really, really good salesperson might fool people into valuing their company at 300 times earnings. Elon Musk has been especially effective at that sort of thing, with Tesla currently trading at around 383 times earnings. Tesla isn’t priced in a way that makes sense based on how much it currently earns; its market cap can only be understood in terms of fantasies that people have...

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