Subject: Re: GOOG
Just a small health warning...P/S has worked well for the firm in the past, but perhaps not as well in future.

It has been a more stable metric than earnings because their net margins have been somewhat variable, and the P/S multiples themselves have been lofty for a very long time for two pretty reasonable reasons: their net margins have been very high, and they have been growing very quickly.

With the capex program that they are looking at the net margins may be on a downtrend, so a move to valuing on a multiple of earnings (or smoothed earnings) may start to work better. This was always going to be the endpoint of their growth journey, so it's a matter of deciding if now is the time to make the switch.

Jim