Could Google, founded less than a decade ago, really be worth $35bn? In a competitive market, the maximum value of an asset is the cost of replicating it. The economic principles could hardly be simpler. If it is possible and profitable for companies to do something, they will. A competitive market is one in which others are free to do anything that they see is rewarding for someone else.

The replication principle does not help much in valuing Barclays Bank, General Electric, BP or Microsoft. Barclays Bank is one of the few survivors of the hundreds of small banks that existed in Britain two centuries ago. Its family tree is complex and impossible to reproduce. You could establish new businesses such as those you find within General Electric, although it would be difficult to create a new manufacturer of aero engines from scratch. You would certainly find it a long and costly process to reproduce the depth of management talent in that corporation.