Rowebbiz

Here are some interesting valuation metrics for tech companies I’ve found. They come from the Morgan Joseph investment bank.

Valuation Metrics Oct09 –

LTM and NTM have the meaning of Last Twelve Month and Next Twelve Months

EBITDA is the well known acronym for Earnings before interest, taxes, depreciation and amortization

So how much is your business worth ???

What America is doing today is creating a nominal increase in stocks/house prices/401k’s by pumping into the economy money from the future to create GDP growth. The money from the future lead to a devaluation of the currency.

I mention a nominal increase because if house prices/401k’s go up 20%, the average American will feel better, but the currency will most likely devalue 25%(more than 20% anyway), thus leaving everyone worse off than before. Inflation is due when you print Trillions worth of currency.

The cumulative deficit of the USA stands at over 9 Trillion( !!!!!) USD for the next decade. Compare this by adjusting to scale with Romania’s deficit of 60 Billion EUR, and you could only say that America is in a deeper mess than we are.

At this time, the current debt to GDP ratio for the United States stands little below 100% ( via TheDebtClock ), but within a decade, with the 9 Trillion estimated, will reach 150% around 2019. Anything above 200% ( the current debt to GDP of the Japanese) is uncharted territory, a place where no modern country has gone before.

Their only option at reducing this deficit seems to be the introduction of a consumption tax, similar to the European VAT. This is the first article in NYTimes about VAT( link here) , but I have read other commentaries from members of government as they are first “testing the waters”.

Some excerpts :

- Members of Congress, like their constituents, are squeamish about such ideas, instead suggesting spending cuts or higher taxes on the rich. But with a lack of political will to do the former, and a practical ceiling to how much revenue can be milked from the latter, economists across the political spectrum say a consumption tax may be inevitable.

- Like universal health care, every other industrialized country in the world already has a value-added tax (as do about 100 emerging countries). ( I see this as a tactic of getting people used to the idea first, I could bet good money that in a maximum of 6-8 years, we will have VAT in the States ).

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Given the obvious/hit you in the head risk of inflation mid-to-long term, I will try to exit part of my current USD holdings. I am waiting for a dip/scare in the market that will shortly drive the USD under the 1.4 boundary against the EUR.

At the time when I’m writing this article, we have 2 resistance points at 1.45 and 1.40. Time will tell.

A forecast of the World Bank indicates an estimated increase of 8.4% for China’s GDP this year. How is this possible, considering that China is an export economy and that their partners ( western countries ) are still suffering from the financial crisis ?

As you may know, the Chinese government launched their own stimulus package to help the economy in November 2008. The numbers look great, but I feel that this fiscal policy does not provide sustainable development, but only fuels other serious problems ( bubble-like ) in the Chinese economy.

Below I will show you an amazing video. It features the newly built city of Ordos. It was built in only 5 years and this was not done with money from the stimulus package. It can become “home” for more than 1 million people. Right now it is abandoned, with almost no inhabitant.

This is just an example of money being spent before the crisis. Imagine what their leaders are doing now, at a regional level, when they have to report an 8%+ increase in economic activity.