The value of Big Tech stocks is nearing $8 trillion, indicating that the stock market "recovery" is mostly a process of redistribution.
The stock market hasn’t recovered since its spectacular crash in March. Why? Because recent all-time highs are the result of Big Tech stocks dragging the broader market along for the ride–all while the broader economy struggles.
The stock market “recovery” is little more than a symptom of the coronavirus pandemic. The more the real economy has to scale down, the more Big Tech can push its digital products and services.
The more the economy shuts down, the more investors and hedge funds use QE money to buy up stocks in the only sector still operating normally: Big Tech. This means Big Tech’s ascent to all-time highs will continue as long as the pandemic restrains normal economic activity.
FANGMAN–Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), Google-parent Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), and Nvidia (NASDAQ:NVDA) — is dominating the U.S. stock market.
Fresh from passing a combined market cap of $7 trillion at the start of August, they’re now very close to $8 trillion.
To put this in some perspective, the United States’ entire GDP in 2019 was $21 trillion.
Other data surrounding the rise of Big Tech stocks also paint a revealing picture.
Apple’s market cap–now roughly $2.1 trillion–is about to exceed the combined value of the FTSE 100. Apple is worth more than the 100 most valuable companies listed on the London Stock Exchange.
FANGMAN’s combined market cap is also now worth about 55% of China’s GDP, 160% of Japan’s, 207% of Germany’s, 278% of India’s, and 285% of the U.K.’s.
This situation is absurd. It’s also dangerous: with an increasing share of wealth being transferred to Big Tech, how will other companies attract funding? How will people find jobs, especially in a world dominated by Big Tech firms that don’t require as many workers?
Not enough people are asking these questions. The stock market is hitting all-time highs, so who cares?
FANGMAN is likely to continue enjoying rising market caps for the foreseeable future.
Despite–or perhaps because of–national lockdowns, Apple announced an 11% increase in annual revenue. Amazon announced a 40% annual increase in revenue.
Due to the digital nature of their businesses, Big Tech can continue performing well during periods of lockdown and social distancing. Meanwhile, most of the broader economy struggles, with the U.S. witnessing over 40 million jobless claims as of May.
At the same time, the Federal Reserve has printed trillions in new money. This has found its way to the stock market. So, where do investors and funds put it? With the few companies still doing well: Big Tech companies.
Big Tech has had a bad association with monopolies and excessive power long before the coronavirus pandemic. To give the appearance of a “healthy” stock market, the Federal Reserve has made them even more powerful.
Given that the coronavirus and its economic effects are likely to be with us for many years to come, this situation isn’t expected to end anytime soon. FANGMAN will continue sucking the blood of the rest of the stock market, and we may all suffer as a result.
Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com and should not be considered investment or trading advice from CCN.com. Unless otherwise noted, the author holds no investment position in the above-mentioned securities.
Last modified: September 23, 2020 2:26 PM