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The reason tech companies sometimes have such high ratios of value to earnings is that investors have learned very well the lesson of Microsoft and Intel: that technology markets tend to be winner-takes-all, and a company that gets an early advantage in a new technology may well be able to translate that advantage into a sustained, lucrative monopoly.
Thus, effective protection in one country may be much higher than that in another even though its nominal tariffs are lower, if it tends to import commodities of a high level of fabrication with correspondingly low ratios of value added to product price.
The relative price/earnings ratios of value stocks at all market capitalizations appear to be expensive relative to growth stocks.
As we noted at the time, "The relative price/earnings ratios of value stocks at all market capitalizations appear to us to be expensive relative to growth stocks … Underweight value stocks, overweight growth stocks.
Figure 2 shows ratios of value added (VA) relative to gross exports (X) in various countries.
Similar(55)
Upper panels: Red and blue circles denote the ratios of values when the cross-sectional values are doubled or halved to the normal values, respectively.
Mean ratios of values normalized to Gapdh expression are shown.
Ratios of values normalized to Gapdh expression are shown.
Results are expressed as Log2 ratios of values normalized to Gapdh.
The q-PCR data are expressed as log2 ratios of values normalized to Gapdh.
Results are expressed as Log2 ratios of values normalized to Gapdh and represent mean values ±S.E.M. from at least three independent sphere preparations.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com