Yes, the SSL will start at 70t and move forward to (maybe) 155t.

But no, 10 13 ton lauches of the Falcon 9 does probabbly does not get you the same thing as a single lauch of 130t. Assemble is a issue. Some things are better built and have less wastage in large intergated units on the ground than assempbled in space.

We should compare apples to apples, not oranges. Which leads me to my biggest gripe about NASA (and by extension, the American government) – their plans are so murky and ill defined. Each stage of the program was like a rung on a ladder – leading to the eventual goal. How does the ISS fit into going to Mars? How does the SLS? How come we are always punting this thing down the road by 20 years. It is almost a program in search of a mission. Please don't take this as an attack on basic science and research – just how NASA does it.

Of their 144b enterprise value, only 15b is long term assets (i.e. infrastrucure) and 24b in short term assets (inventory). They don't own any employees

Most of the value is projected earnings, and those projections assume a good deal of growth in earnings - say 30%+ over the next 10 years.

Amazon has been booking profits since 2002.

The issue is that Amazon's return on investments has been low, lower than the S&P 500 as a whole. They have been pursing market share instead of short term profits. They have been investing in new risky business areas. Stockholders currently share Bezos's bullish predictions that short term sacrifice is worth the risky long game. It has worked for Berkshire Hathaway but not so well for Sony. At some point it is going to need to become a more normal company.

True.

But the SLS should be able to lift twice as much as SpaceX's future Falcon Heavy and 10 times the current Faclon 9. If we want to launch man into deep space, we are going to need something close to SSL than the Falcon 9.

I think we are mostly on the same page. My point, maximizing return in a risk / reward framework does not imply maximizing earnings this quarter. We may be arguing over language rather than concepts.

On the prospectus point I disagree. Common law and securities laws (examples would be the Securitas Act of 1933 and 1934) put additional fiduciary duties on the board and CEO that require them to work in the best interest of the shareholders. The prospectus says that the board can set the pay for the board and CEO with no restriction. The law prevents the board from confiscating a generous (or even all) of the profits for their pay. (This is kind of like your B example, but I will point out that is covered by law, not the prospectus.) See Tyco and Adelphia as blatant modern day examples. For a more subtle example, look up the various lawsuits between Craig's List and Ebay (a minority shareholder).

I personally feel you put too much emphasis on the prospectus. Yes, the prospectus 20 years ago talked about reinvesting profits – they had to fend off entities like Pets.com and Toys.com. Most companies (and their business environments) have evolved enough that 20 year old boiler plat language is no longer applicable. (The one exception to this might be mutual funds, which must issue a new prospectus every year. However, even than there is a whole host of rules that govern what a mutual fund can and can not do.)

http://en.wikipedia.org/wiki/T...
http://en.wikipedia.org/wiki/A...

Not quite.

The "book value" of equity, from the balance sheet, is assets minus liabilities. It is a accounting principle.

The "market value" of equity is the discounted (time / risk) value of expected future earnings. It is the general consensus of the stock market.

These two concepts rarely meet in real life.

It is also one of the reasons why Japan has stagnated for the past 15 years. They kept plowing profits back into failing "zombie" companies. Japan would have been much better if they had returned some of their profits to their investors so the investors could invest in the next new shinning thing. Instead the Japanese conglomerates kept everything to themselves. One could argue that South Korea's chaebol are worse.

The answer, of course, is about balance.

Not quite true. The board (and by extension, the CEO) have a fiduciary duty to run the company in the best interest of the shareholders, which means maximizing returns, factoring in risk. Boards and CEOs have been sued for this. Now, the courts have taken a very wide broad interpretation of this, normally deferring to the board decisions. Most of the time when the shareholders believe the board is incompetent they either sell their shares (flight) or start a proxy war (fight)

Stock prices have nothing to do with "influence of the company climbs" - I am not even sure what that nebulas term mean.

Stock prices are based on the discounted value for future profits (well, Free Cash Flow if you want to be technical). To use your example, FB is currently valued at 80x of price to earnings (Yes, FB has profits). The reason why it is valued at 80x P/E instead of the S&P 500's P/E of 20x, it is because of expected growth in profits. Same thing when FB was first starting out and had losses. Who cares about current profits and losses? That is water under the bridge. When you buy a stock it is because of expected future profits.

Profits can either be defined as earnings (revenue - costs) or beter yet, Free Cash Flow (FCF) to shareholders.

As to your point, you are confusing profits (a flow variabole, found on the income statement) with wealth (found on the balance sheet.). The "profits" you are pointing to are being caused by low intrest rates which causes future earnings to be more vaulabe. This has nothing to do with the current disccusion, how should Amazon increase it future earnings – by paying it profits in cash to it's shareholders or by reinvesting in new, risky ventures. (The answer, of course, is both – the tricky part is finding the correct balance.)

To explain, the stock market has not jumped up because of increased profits or expected income profits (there is some of that). It is because the Price to Earnings level has jumped to 20x. A better way of saying this is that the Earnings to Price has fallen to 5%, tracking the fall in 10 year US Government bonds, down to a Coupon to Price Yield of 2.5%. As intrest rates fall, the discounted time value of future profits increase.

Bill Gross, from Pimco, explaining why 20x P/E ratio may not be high.
http://www.pimco.com/EN/Insigh...

You are not going to find it on Microsoft's website. By the way, everything I am stating falls under subjective accounting judgments.

Microsoft must disclose any relationship that is material significant. i.e., if the US Government bought 10% of their stuff they would have to disclose that. Of course, Microsoft sells nothing to the "US Government" – they sell to the executive branch, Social Security Administration, etc.

Microsoft must break out results along geographic lines. i.e. North America. Still not going to help us.

Microsoft has the option to break out results along product lines. Commercial, consumer, phone, etc.

But Microsoft does not have that type of relationship with the government to break out the results. (not saying it should not be done.)

I am a huge fan of passive index investing. However, that rests on the efficient mark hypothesis, which assumes the underlying stocks are being priced correctly. In order to do that you need to enter my fantasy world were 1. time machines don't exist, and the future is filled with risk and uncertainty and 2. people have varying risk profiles, some of which are lower than the generic risk profile of the S&P 500.

Without people pricing the individual securities correctly the aggregate index means nothing. Another way of say this is, "What price do you think MSFT should be?"

The S&P is expected to return what this year – 9.65% with a standard deviation (assuming a normal bell curve, which is optimistic) of 9.61%. Is that the right risk / return level for you? Maybe you want to invest in lower return but less risky stocks?

And on a side note, why chose the S&P 500 to invest in? Why not the Russell 3000 or the MSCI World Index?

Microsoft has returned 100% in the past 10 years, dividends reinvested, or 7.25% annually. S&P 500 has returned 118% with dividends reinvested, or 8.2%.

Which, in my mind, makes them kind of equal. Microsft is now considered a value company , so lower risk and lower reward. Adjust for risk and it looks better. Also, chosing the past 10 years is kind of arbitrary - why not 7 or 12 years.

Such things do exist. An early application was to power pacemakers. A automaker (can't remember if it was Ford or GM) even built a prototype. IIRC it uses thermal power from the decaying atoms.

And even those are not earning much money.

In a interview a few years ago with Ani DiFranco, the report was gushing on how much higher her margins, as a independent artist, than The Dave Mathew Band. Which made DiFranco laugh because The Dave Mathew Band was making so much more money. DiFranco pointed out that going independent was about freedom of control not about the money.

It is not about margins it is about market structure. Piracy has trained consumers that music should be cheap.