Invest Significantly at the Maximum Point of Pessimism 183Rephrasing Buffett, odds are very high that you are paying full
value or a premium price to invest in the popular issues of the day.
It would seem crystal clear to us all that anytime an asset is bought
in an environment characterized by many buyers, the price paid
will not be as attractive as when the same asset is bought in the pres-
ence of few buyers. The economic laws of supply and demand apply
to the markets. When demand is high for securities — during bull
markets — prices increase to satisfy that demand. Conversely, when
there is very little demand for equities — the consequence of bear
markets — prices decline.Table 9.1 Most Valuable Businesses (in Billions)
Year Company Market Cap Revenue Net Income
1987 IBM $89 $51 $4.8
1988 IBM $68 $59 $5.8
1989 IBM $70 $63 $5.2
1990 IBM $61 $69 $6.0
1991 IBM $75 $65 $2.1
1992 Exxon $69 $103 $4.8
1993 Exxon $78 $100 $5.3
1994 GE $90 $60 $5.9
1995 GE $92 $70 $6.6
1996 GE $126 $79 $7.3
1997 GE $120 $91 $8.2
1998 GE $260 $100 $10.7
1999 Microsoft $419 $20 $7.6
2000 Microsoft $492 $23 $9.4
2001 GE $407 $126 $14.1
2002 GE $401 $131 $16.6
Source: Published by http://www.TheStreet.com by Mohnish Pabrai and included in the book
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