Here at Horizon, we are fortunate to have a deeply engaged client base—meaning lots of client questions. Not too many, that’s not the problem. Just too many to do them all justice in one sitting. Why not just answer and move on? Some require a certain minimum background and defining of terms. The standard P/E ratio might be a meaningless or misleading valuation measure for a certain type of company, but the reason needs to be explained, as well as why an alternative one is more suitable. For example, if we are discussing the Mag 7, are we talking about the Mag 7 with a P/E of “only” 24.8, which is cheaper than the 29.6 of 12 months ago? Or the one trading at an average 150x free cash flow?! Which is a wee bit more expensive than the 45x of 12 months ago, when those largest companies in the U.S. had plenty of free cash flow. And what happens when they don’t?
But the Mag 7 aren’t the topic of this quarterly Commentary: the Time and Compounding Edition. They’re EASY to figure out. The topic is—and we’re taking odds on this—the single most important yet most ignored and unused factor of any in long-term investing. The way TIME really functions in compounding. What’s missing, we finally decided, is a simple math lesson to really SHOW it.
2nd Quarter 2026 Commentary
Here at Horizon, we are fortunate to have a deeply engaged client base—meaning lots of client questions. Not too many, that’s not the problem. Just too many to do them all justice in one sitting. Why not just answer and move on? Some require a certain minimum background and defining of terms. The standard P/E ratio might be a meaningless or misleading valuation measure for a certain type of company, but the reason needs to be explained, as well as why an alternative one is more suitable. For example, if we are discussing the Mag 7, are we talking about the Mag 7 with a P/E of “only” 24.8, which is cheaper than the 29.6 of 12 months ago? Or the one trading at an average 150x free cash flow?! Which is a wee bit more expensive than the 45x of 12 months ago, when those largest companies in the U.S. had plenty of free cash flow. And what happens when they don’t?
But the Mag 7 aren’t the topic of this quarterly Commentary: the Time and Compounding Edition. They’re EASY to figure out. The topic is—and we’re taking odds on this—the single most important yet most ignored and unused factor of any in long-term investing. The way TIME really functions in compounding. What’s missing, we finally decided, is a simple math lesson to really SHOW it.