The Reality of the Price-to-Sales Ratio

DRIGGS, IDAHO – I spend all my free time studying macroeconomics and figuring out how to win money from the financial markets.

(Have done this for years.)

Today, I saw several shocking statistics… (More below.)

Four Hours to the Nearest Airport

Greetings from Idaho…

We are a traveling family. We have no home and no possessions (except what we can fit in a suitcase). We’d been living this way for almost three years… but with winter coming, we decided to take a break from our travels.

We live in a cabin in the Rocky Mountains now.

It’s cold and snowy outside (we got 10 inches last night) so we just hang out in our pajamas, doing jigsaw puzzles (and listening to music, watching Netflix, and doing our homework).

This is Miles (10) earlier today…

We’re living in a tiny town called Driggs, in Idaho. It has a population of 1,660, one traffic light, and it’s surrounded by mountains. It’s four hours to the nearest international airport…

We’ve come to one of the snowiest places in America… the Teton mountains. The local ski resort (Grand Targhee) averages 500 inches of snow per season.

Luckily, our little Airbnb is nice and cozy, and we’ve got all the winter gear we need to be comfortable outside. (We got everything from the charity store for about $300.)

We’ve had 114 inches of snow this year already and two more big snowstorms are coming this week…

Here’s Penny (8) making the most of the powder…

Four Shocking Statistics

Back to economics…

This weekend, I learned that Airbnb – the popular online vacation rental marketplace – has a market cap equal to Marriott, Wyndham, Hyatt, Hilton, Choice Hotels, and Extended Stay combined. (Airbnb, which went public last week, has no assets outside investor cash and its online platform.)

Meanwhile, Tesla accounts for 32% of the global auto industry’s market cap… but it makes less than 1/11th of its revenue.

Then there’s DoorDash, the popular American food delivery service. (It also went public last week.) DoorDash’s market cap is almost the same as the market cap of the world’s shipping industry.

Finally, this chart shows the S&P 500’s price-to-sales ratio…

I like price-to-sales as an indicator because “sales” don’t lie. Of all the numbers in the corporate accounts, it’s one of the most “real.”

When the ratio is high, it means stocks are expensive. And right now, as you can see above, the ratio is the highest it’s ever been…

– Tom Dyson

P.S. Holed up in a hotel room, I recorded this URGENT video. It’s about the huge mess America has gotten itself into economically, what’s next, and the single best thing you can do today to preserve and grow your wealth. Watch it here before it’s too late…

Like what you’re reading? Send your thoughts to [email protected].

In today’s mailbag, kind words for Tom’s Postcards… and the immorality of bitcoin…

Reader comment: Your Postcards is about the only newsletter I read consistently (aside from Bill Bonner’s). Well done, thank you. Keep up the good work. All the best to you and your family.

Reader comment: I thought of writing to you as I realized I had been reading your postcards for many months now, and enjoying them a lot, yet I hadn’t given you any feedback until now. Since you mentioned that the feedback you get gives you the motivation to keep writing, I wanted to let you know how much I enjoy reading about your adventures and seeing the world through your eyes. Letting us in to your adventurous lifestyle, sharing more intimate and vulnerable moments of your life, offering your vision and understanding of the financial world, all of these are very refreshing and inspiring to me.

There are so many things I like about your postcards and lifestyle: how you sold everything to travel the world with your family, your long-term and stress-free investment strategy, your background and past struggles (which, in my case, helped me relate to you). I really enjoy reading about it all. Of course, it only makes sense for you to keep writing if you still enjoy it yourself. Until then, you’ll know I do.

Tom’s response: Thank you for this message!

Reader comment: It’s been intriguing (to say the least!) reading the flood of opinions you receive regarding bitcoin. I have a few comments for the reader who feels that bitcoin is somehow immoral. First, fiat currency is not backed by anything other than the paper it’s written on. Obviously, as more and more of this confetti is printed, it becomes worth less (eventually worthless) no matter what currency the government uses to collect its taxes.

The real immorality is exactly here… that the government somehow hopes to inflate away its immoral debt, with the resulting collateral effect of destroying the value of millions of its citizens’ savings. This is exactly what bitcoin was designed to prevent!

Secondly, there is nothing immoral about investing in cryptos as they’re really no different than buying a stock or a real estate property and hoping to make a profit. In each case, what you are contributing is (usually) your own money, which you are willing to risk on a level playing field with all other investors. If you win big, that is your reward, and this should not be begrudged or shamed by anyone!

Lastly, a couple other comparisons: If the reader feels that somehow bitcoin lacks scalability, then I suppose he/she sees fiat currency as eminently scalable while the printing presses ensure a never-ending supply. Comparing the energy consumption of mining bitcoin to mining “beautiful” gold, I suspect, would come out heavily in favor of bitcoin. I invite the reader to check out what many other advisors (Teeka Tiwari, Porter Stansberry, etc.) are saying about cryptos; it is the future and the future is here.

Meanwhile, other readers enjoy watching Penny learn to ski… and still, others share skiing tips and fond memories…

Reader comment: As a skier for over 40 years and an emergency medicine physician, please get a helmet on Penny!! A head injury can occur so easily from what appears to be a simple fall and can be devastating. Often it’s not the skier themselves, but another skier who poses the biggest threat because they’re out of control. Do yourself, your wife, and your kids a favor and buy everyone a helmet. Faithful and concerned reader.

Tom’s response: We all wear helmets. That video of Penny was an exceptional circumstance.

Reader comment: I love reading your postcards about your family’s adventures and advice about gold. I bought some many years ago and look forward to the magic number, so that I may sell my gold and buy high-dividend paying stocks just in time for my twilight years. I was delighted to see Penny skiing. My five-and-a-half-year-old granddaughter, Olive, was diagnosed with a very rare genetic disorder called DDX3X.

My daughter and son-in-law thought she might like skiing and had planned to take her to Vermont this winter. She, too, has low muscle tone as well as major speech issues. Seeing Penny gliding down the hill brought tears to my eyes. Thank you for sharing this beautiful little girl with me. Enjoy the time with the kids. They grow up so quickly. And keep the postcards coming. I enjoy seeing the kids and reading about your adventures.

Tom’s response: We nearly named Penny “Olive.” Penny also has a rare genetic disorder.

Reader comment: Very cool seeing Penny learning to ski; she is doing great. Just stay behind her so that the out-of-control speedsters don’t hurt her. It reminds me of when we were teaching our grandchildren to ski. Great fun.

Sounds like the criticism you received from one of your subscribers for driving back and forth from your mountain adventure was a scared liberal sheeple who is afraid to go out in their backyard. As a good friend of mine and ex-Marine reminds me when people make stupid comments about “risking your life” (the BS COVID fear), that “life is in the risk.”

Hello, what the hell is an adventure about? Tell your subscriber to grow a pair and turn off their Zoom. I’m over Zoom, and all the technocrats, and the so-called “secular progressives” that don’t know how to light a match on their own.

Reader comment: Skiing is for life. When my dad broke his hip at 79, he had to cancel two ski trips, one “premier neige” for the first fall of winter before, and a second, longer, one for after his 80th. If he had not fallen, I am sure he would still be skiing today. Ski as long as you safely can. All the best.

Reader comment: Enjoy your daily thoughts, and, we are neighbors in kind somewhat, as we have just purchased property to build up in the Island Park, Idaho area. We have taught all three of our children to ski, including our oldest with special needs. Maslow’s Hierarchy of Needs is alive and well with children and skiing:

1. Warm. Buy really good jackets/gloves (mittens). Hand-warmer packets. And when it is cold, don’t even go. (A challenge in your neck of the woods). Best purchase we have found? Helmets. We were late to the helmet game, but they not only protect but are much more effective at keeping you warm than a hat. And make sure the boots are comfortable. Bad boots equal a bad day.

2. Fun. My worst day of skiing: 35 inches of fresh powder in Big Sky. But my youngest two kids wanted to do the groomed runs. And really didn’t like “all this snow.” Ski where your kids want to ski (especially as they get more confident on the mountain). When skiing with kids, you go to where they are having fun. This means a lot of runs down the green slopes.

3. Good instruction. Targhee is probably like Durango (where they all learned). Often, group lessons in the middle of the week mean private lessons at group lesson prices. Find an instructor they click with, and then ask what days they are working. Learning curve will accelerate dramatically

4. Frequent stops. Hot chocolate. Hamburger. Sprite. Etc.

5. Challenge. They like a little bit, but not too much. Once a day we would challenge them (particular run, steep area, icy area, etc.).

   There is nothing better than having the entire family on a 10-minute chairlift ride. You talk, you laugh, and you are all in the moment together. It makes it all completely worth it. But any skiing parent will tell you: It takes a lot of patience and some time to get to that point. But so worth it, and will become a lifetime sport.

   P.S. This is even more important for any adult who is learning to ski. Much harder sport to learn when you’re old than when you’re young! Only change I would make is buy a custom-fitted pair of boots for any adult skiing. Comfortable boots make a world of difference.

Tom’s note: Thank you very much for all of your kind messages and encouraging words, please keep writing us at [email protected]. I would have stopped writing years ago if not for all the support you’ve given us.

Please note: I’ll never reveal your identity or any potentially revealing personal details when I republish your letters…