Saturday, October 01, 2011

Revisiting BHP and Google at Year Four

1 October 2011

Four years ago, I predicted that over the next ten years, BHP Billiton might increase in market value tenfold, while Google could fall in market value tenfold, making BHP worth 100 times as much as Google in terms of market capitalization. (Click
here and here for the original articles.)

We are not there yet, but as the chart shows, the trend is clearly in favour of BHP, which has doubled relative to Google since the beginning of 2007. (I have continued to comment on the comparison between February 2008 & April 2011.)

Had we done the comparison in April of this year, BHP would have tripled in market capitalization relative to Google at that time (compared to January 2007). BHP happens to be in a downdraft right now over global recession worries. Of course, that hasn't stopped it from doubling Google's performance over the past almost 5 years!

By the way, both are great companies. All I'm saying here is (1) in our inflationary era, things that are real preserve their value relative to things that are "not," and (2) Equities are in a secular (multi-decade) downtrend which will return valuations to earth (as though they were pinned to the mat, to be blunt) - it's just what markets do.

All posts on this topic:

Revisiting BHP and Google at Year Four

An Early Update on Google versus BHP

Google versus BHP Billiton - Part II

Meet Me Here in Ten Years' Time: BHP Billiton vs. Google


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