Good morning. Yesterday’s market response to Google’s disappointing earnings report, which landed the evening before, surprised us. The market appeared to conclude that Google’s problems are Big Tech problems — Google, Microsoft and Amazon all got hit hard, while the market as a whole was merely dreary.

It seems to us that Google’s slowing revenue is an economic rather than an industry phenomenon. Advertising is the first corporate expense to be cut in a downturn. While weak demand was not the most appalling thing in Facebook’s quarterly report yesterday afternoon -- that dubious trophy goes to out-of-control spending -- revenue fell, too. It is reasonable to expect that what is happening to online ad spending now will happen to many other industries in the quarters to come, and it does not look to us like that is priced into the market. Disagree? Email us: [email protected] and [email protected].

Growth is mostly impossible to predict, and how you value companies is mostly wrong

The most important input to most stock valuation methods is growth, and this makes sense. Growth compounds. If a company can consistently increase its revenue or profit even slightly faster than its peers, that company is going to be much more valuable than the rest in five or 10 years.