So where are we on the sentiment scale relative to the past? Subramanian notes that, while the Sell Side Sentiment index now sits at a 19-month high (up 12 of the last 15 months), we are still in “Buy” territory with stocks still way too forsaken and close to their 2009 sentiment lows. The strategist says “Historically, when our indicator has been this low or lower, total returns over the subsequent 12 months have been positive more than 95% of the time, with median 12-month returns of +27%.” The indicator’s current level would indicate an expected return for the S&P 500 of 18% in the next 12 months, based on the report.
"Success is getting what you want and happiness is wanting what you get" - Warren Buffett
"I believe that the multiples of technology stocks should be much lower than multiples of stock like Coke because we are subject to a complete change in the rules" - Bill Gates
"I want to retire about five years after I die. Maybe." - Warren Buffett
"The thing that was scary to me wasn’t quitting and starting a company. It was when I started hiring my friends and they expected to be paid." - Bill Gates
"Our business is not the one where money makes that much difference at all. If you would take 30 of our top people and draft them over to the other team, the score would change very very quickly." - Bill Gates
One of the most interesting parts of this Q&A session for me was hearing that the critical business decision for Bill Gates was to surround himself with great people like Paul Allen and Steve Ballmer. Ballmer has just announced that he quits and with Gates’ words about the multiples in mind (quote above) we have two major risks materializing for the Microsoft. But with the PE multiple of 13x, dividend yield twice the average for industry and cash equal to about 1/6 of its market value, Microsoft is still one of the best positioned companies to make waves and benefit from the the cloud computing mobile/ revolution.