WSJ: “When I started on Wall Street, a veteran pulled me aside: “Tech stocks are just like Vancouver gold mining stocks. You buy them when the price-to-earnings multiple is high, even infinite, and sell them when the P/E is low.” Huh? Newly discovered gold mines, he explained, go public, attracting speculative investors. The miners spend a fortune on equipment, causing stocks to collapse since the mine makes very little profit early on. But even as profits increase, P/E multiples shrink as mines gets closer to extracting all the gold. We’ve seen it with personal computers, networking, dot-com, mobile, software as a service, electric vehicles and now artificial intelligence. A hype cycle with massive speculation is followed by a selloff as the hype fades and reality sets in. Then the winners who really do successfully mine the gold (or technology) emerge, and their stocks meet or beat their previous peaks.”
Bethany MacLean: “The seven companies are Apple, Alphabet, Amazon, Meta, Microsoft, Nvidia, and Tesla—“the Magnificent Seven,” Wall Street called them. At the close of 2025, these stocks had returned a remarkable 875 percent in 10 years. Indeed, over the last three years, they accounted for 55 percent of the market’s total returns, with the other 493 companies in the index making up the other 45 percent. Within a decade, they have skyrocketed from one-eighth the value of the S&P 500 to almost one-third.” [via Arnold Kling]
Mint: “Meta Platforms is expected to surpass Alphabet’s Google to become the world’s leading digital-advertising business, a first for the social-media company. Advertising research firm Emarketer projects that Meta will surpass Google in net ad revenue this year, reaching over $243.46 billion, edging past Google’s $239.54 billion. The research firm’s estimates account for revenue after deducting traffic and other content acquisition costs, such as the money Google shares with its creators. Meta’s ad business is seeing a lift, thanks to the success of new ad offerings, including the short-form video format Reels, and the broader boost that artificial intelligence has provided.”
Colossus: “Hyperliquid, a blockchain and cryptocurrency trading exchange, is one of the most profitable enterprises per employee on earth. Last year, its 11 employees generated over $900 million in profit. It is three years old, has a market capitalization of $10 billion, and has never taken a dollar of venture capital. The main figure behind it, Jeffrey Yan, is 31 years old and has become, not entirely by choice, one of the more recognizable faces in an industry.”
