SII: FANG & NOSH - TECHNOLOGY THE TOP SIX GLOBAL MARKET CAP COMPANIES (FOR FIRST TIME)
Technology mega-caps occupy all top six spots in the ranks of the world’s largest companies by market capitalization for the first time ever.
Up 39% this year, the $1 trillion those firms added in value equals the combined worth of the world’s six-biggest companies at the bear market bottom in 2009.
Apple, priced at $810 billion, is good for the total value of the 400 smallest companies in the S&P 500.
- To cast those exact same words in a whole different light, no, Apple is not ‘good for the total value of the 400 smallest companies in the S&P 500’.
- Yes, you can argue that Apple’s ‘value’ has lifted other stocks too, but this has happened in a time of zero price discovery AND near zero interest rates.
- That means people have no way to figure out if a company is actually doing well, so it’s safer to park their cash in Apple.
- Ergo: Apple, and the FANGs in general, take valuable money out of the stock market. At the same time that they, companies with P/E earnings ratios to the moon and back, buy back their stocks at blinding speeds.
- So yeah, Apple may be ‘good’ for the total value of the 400 smallest companies in the S&P 500, but at the same time it’s not good for that value at all. It’s killing companies by sucking up potential productive investment.
And Apple’s just an example. Silicon Valley as a whole is a scourge upon America’s economy, hoovering away even the cheapest and easiest money and redirecting it to questionable start-up projects with very questionable P/E ratios.
But then, that’s what you get without price discovery.