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U.S. tech stocks are now worth more than the entire European stock market

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Re: U.S. tech stocks are now worth more than the entire European stock market

#61

Post by sirmoveon »

KMag wrote: post #41
sirmoveon wrote: post #21

"Pour water into your wine to create more wine" sort of scenario. Why nobody is talking about the USD being diluted and the inflation effects are embodied in virtual equity valuations?

If that's the case, one would expect the FX rate changes to equally increase European market valuations, if USD is the unit of account (numerare). If the Euro were being diluted at a rate that kept FX rates in check, then one would expect that to equally buoy European market valuations. So, there may well be something to be said about USD dilution, but I don't see how it affects the relative market capitalizations of…

Most world economies keep their reserves in USD or are highly leveraged with USD transactions. The denominator by which everyone has to abide by is the USD and its probably why the relative advantage you are speaking of doesn't present itself.

Re: U.S. tech stocks are now worth more than the entire European stock market

#62

Post by lazharichir »

Silhouette wrote: post #35
drwoland wrote: post #8

Earlier quoted context omitted.

The sad thing is, at least in the UK start ups are often headquartered in the US to make it easy to chase valley VCs.

Also, we have an annoying amount of red tape from both the UK itself and, at least for the immediate future, the EU. It gets in the way of starting a business, but worse, it gets in the way of taking significant steps necessary to grow a new business like taking on your first employees. If you've got months or years of runway from external funding, that's irritating but not a big deal. You hire someone to deal with i…

Do you have examples of what you mean by red tape from the EU that prevents a bootstrapped startup from thriving?

Re: U.S. tech stocks are now worth more than the entire European stock market

#63

Post by zerkten »

james412 wrote: post #33
libertine wrote: post #24

Earlier quoted context omitted.

The problem is not the lack of exciting tech companies, but the ability - and interest - to retain them in Europe. Money is cheap in the US, and most of EU countries are quite pleasant to live without obscene amounts of money in the bank (basically thanks to public services), so any good offer it's quite convincing. Not to mention that EU governments don't see tech companies as strategic assets, unlike the US/China.…

Another aspect of the absent tech boom in Europe is the structure of the public markets, they're basically bullshit compared to what happens in the US. In the case of growth companies, it's definitely not a talent thing, the American financial system has a well developed pipeline for growing ideas and providing endless access to capital. Europe simply doesn't have that. We don't even have consolidated pricing for our…

> In the case of growth companies, it's definitely not a talent thing, the American financial system has a well developed pipeline for growing ideas and providing endless access to capital.

This doesn't just apply to growth companies, or tech. It's a fundamental difference for all companies no matter how you segment Europe.

It is a difference that I don't think Europe will ever get past because changing it will be viewed as an attack on beliefs and ideals which can't trade-off to be similar to those in the US or China.

(FWIW: I'm an UK/Irish citizen living in the US.)

Re: U.S. tech stocks are now worth more than the entire European stock market

#64

Post by zerkten »

ginko wrote: post #52
james412 wrote: post #33

Earlier quoted context omitted.

Another aspect of the absent tech boom in Europe is the structure of the public markets, they're basically bullshit compared to what happens in the US. In the case of growth companies, it's definitely not a talent thing, the American financial system has a well developed pipeline for growing ideas and providing endless access to capital. Europe simply doesn't have that. We don't even have consolidated pricing for our…

If anything it's the obscene amounts of funding in silicon valley that's bullshit.

The obscene amounts of funding exist for various reasons. I don't disagree with it being bullshit, but the analysis of why this occurs is relatively straightforward. Implementing a solution to balance the situation is the difficult part.

Re: U.S. tech stocks are now worth more than the entire European stock market

#65

Post by tonyedgecombe »

Silhouette wrote: post #35
drwoland wrote: post #8

Earlier quoted context omitted.

The sad thing is, at least in the UK start ups are often headquartered in the US to make it easy to chase valley VCs.

Also, we have an annoying amount of red tape from both the UK itself and, at least for the immediate future, the EU. It gets in the way of starting a business, but worse, it gets in the way of taking significant steps necessary to grow a new business like taking on your first employees. If you've got months or years of runway from external funding, that's irritating but not a big deal. You hire someone to deal with i…

I don’t know where you got that idea from, the UK is one of the easiest places to start a business.

Re: U.S. tech stocks are now worth more than the entire European stock market

#66

Post by smabie »

ex_amazon_sde wrote: post #38
ng12 wrote: post #5

Earlier quoted context omitted.

And I can use that price to turn my stocks into real, hard cash. It's not like it's funny money.

> And I can use that price to turn my stocks into real, hard cash you can - but if good fraction of the stockholders were to lose hope and start selling stock the market value would evaporate into thin air very quickly. OTOH if the value of those stocks was 80% backed by stable assets (production plants, building, land, gold, ...) it would evaporate much less quickly. That fits the definition of virtual, speculation-…

I mean, in a lot of cases, it's backed by cash flow. I get what you're saying, but FAANG stocks aren't these pie in the sky high P/E kind of stocks: they are delivering insane revenue and gross profits.

Re: U.S. tech stocks are now worth more than the entire European stock market

#67

Post by AnotherGoodName »

spideymans wrote: post #14
baconandeggs wrote: post #7

Earlier quoted context omitted.

The "growth" in tech has been entirely driven by monetary policy. Google or Facebook or Apple or Netflix or Amazon have done nothing special than what they've been doing for the last 5 years. I wish we were getting insane tech out of this bull run but the truth is there's no "innovation" behind it and their paper is just being used as a shield by investors which is why their stocks keep going up.

> The "growth" in tech has been entirely driven by monetary policy. For the uninformed, what monetary policy exactly is driving this growth?

They're selling corporate bonds at extremely low interest rates right now:

https://www.reuters.com/article/us-alphabet-bonds/google-own...

"Of the $10 billion on offer, the $1 billion five-year tranche was issued at a coupon of 0.45%, the lowest coupon seen on a U.S. corporate bond at that maturity, according to Refinitiv data, which goes back to 1980."

I can give similar links for Apple: https://finance.yahoo.com/news/apple-joins-tech-borrowing-bo...

The Coronavirus CARES act enables the Federal Reserve to buy Corporate Bonds. This is one of the factors driving down the bond rates: https://www.proskauer.com/alert/corporate-credit-facilities-...

"The SMCCF, initially funded with $25 billion of equity from Treasury, will leverage its equity ten times when acquiring corporate bonds from investment grade issuers and ETFs whose primary investment objective is exposure to investment grade corporate bonds. It will leverage its equity seven times when acquiring corporate bonds from issuers rated at below investment grade, and from three to seven times when acquiring other eligible assets, depending on risk."

So if you're a large corporation capable of selling bonds you can get a loan for far less than even the extreme low end inflation predictions. The big tech companies have the ability to take advantage of the current climate.

Re: U.S. tech stocks are now worth more than the entire European stock market

#69

Post by smabie »

vharuck wrote: post #59

What's the benefit of lumping all these companies into a single bucket and calling it "tech?" Looking at it as an investor, it's a distracting term. When the pandemic hit, did Uber start making more money like Amazon? If more countries pass laws like the GDPR, will that hurt SalesForce as much as Facebook? The pandemic is a great test for how we look at the market. If two companies fare wildly differently in an extre…

Okay of the 11 GICS sectors, give me examples of what you think some of these companies should be classified as.

Re: U.S. tech stocks are now worth more than the entire European stock market

#70

Post by xiphias2 »

Ericson2314 wrote: post #28
libertine wrote: post #24

Earlier quoted context omitted.

The problem is not the lack of exciting tech companies, but the ability - and interest - to retain them in Europe. Money is cheap in the US, and most of EU countries are quite pleasant to live without obscene amounts of money in the bank (basically thanks to public services), so any good offer it's quite convincing. Not to mention that EU governments don't see tech companies as strategic assets, unlike the US/China.…

> Not to mention that EU governments don't see tech companies as strategic assets, unlike the US/China. Maybe that was once true, but it certainly isn't true today.

I don't see anything happening regarding this. All money is going towards EU projects that are dreamed up by burocrats, and goes to either things that already exists, or flashy non-tech startups with good connections.

I don't know about western europe, but most of the tech startups in eastern europe have a sales/VC representation in the US for a reason.

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