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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

#91

Post by e40 »

Guzba wrote: post #4

The growth in tech stocks has been pretty insane imo. It's so easy to be afraid though and call this another 2000, but we really don't know what the future holds. I wish Europe had it's own set of exciting tech companies. That would be amazing. As a human living on this planet, the more things available to me, the better. Unfortunately, Europe doesn't seem to do much anymore. Google "European growth stocks". I want t…

Unfortunately, Europe doesn't seem to do much anymore. Google "European growth stocks". I want them back in the game.

I don't want to hijack this thread, but why is that? Apropos to the political situation in the US right now (ugh), it's a constant point of the right wingers that you should vote for them because we don't want to become like them.

I honestly don't know the answer. Tech didn't suffer under Obama, but he wasn't particularly liberal. I wonder what the simulation of a left wing POTUS would do for Americans.

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

#92

Post by Silhouette »

AznHisoka wrote: post #47
Silhouette wrote: post #22

Earlier quoted context omitted.

The "growth" in tech has been entirely driven by monetary policy. Also a few billion people stuck at home much more than usual this year.

FB, Google, and Microsoft all lowered their revenue guidance they set pre-COVID. This stay at home situation has clearly benefited some companies (Zoom, Docusign, Amazon), but definitely not most tech companies.

I'm not sure your sample is representative here. Facebook and Google are primarily ad companies, and it's unclear whether the current situation would be a net positive or a net negative over the entire set of businesses that might advertise with them.

Meanwhile, markets like e-commerce, telecommunications and online entertainment are booming thanks to the stay-at-home culture, and no doubt there will also be an entire generation of new and/or rapidly growing products and services aimed at supporting home offices, flexible work patterns and more distributed teams.

I'm not sure we'll ever go all the way back to how things were now, even if someone discovers a perfect cure for the coronavirus problem tomorrow. I think when the dust has settled, we will have learned that it's often useful to have specialised workplaces, but also that working from home is fine for some people doing some jobs at least some of the time if they want to. I suspect we'll see some big, permanent changes in industries like retail as a result, and that this in turn will sustain at least some of the boost that a lot of tech stocks have received recently.

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

#93

Post by AznHisoka »

Silhouette wrote: post #92
AznHisoka wrote: post #47

Earlier quoted context omitted.

FB, Google, and Microsoft all lowered their revenue guidance they set pre-COVID. This stay at home situation has clearly benefited some companies (Zoom, Docusign, Amazon), but definitely not most tech companies.

I'm not sure your sample is representative here. Facebook and Google are primarily ad companies, and it's unclear whether the current situation would be a net positive or a net negative over the entire set of businesses that might advertise with them. Meanwhile, markets like e-commerce, telecommunications and online entertainment are booming thanks to the stay-at-home culture, and no doubt there will also be an entir…

There are many non-ad companies whose revenue has not accelerated at all due to covid such as Salesforce, IBM, Atlassian, and DropBox. Sure most of them have not been terribly impacted as well, but the idea of “digital acceleration” simply has been a buzzword, not a reality.

Even for some companies that have had some boost, the spike in share prices has been over exaggerated. One glance at the price movements and it’s fairly obvious. A company like DataDog or Fastly is NOT 2-4 times as valuable just because more ppl are working from home. This market is 99% fed-induced, and 1% actual fundamental improvement

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

#94

Post by hogFeast »

nightski wrote: post #75
hogFeast wrote: post #34

Earlier quoted context omitted.

And Microsoft multiplied their profits a few times between 2000 and 2010 while their stock dropped 75%. Valuations are important. Valuations are affected by the monetary policy/liquidity cycle. And Google's valuation is growing faster than any rational measure of economic value.

No, it dropped 75% in 2000 due to the dot-com bubble. If you started in 2001 you actually had a 60% gain by 2010.

January 2000 - $60 January 2010 - $30

I did just eyeball it from a few months before. And note, I said 2000...not 2001. And even at the end of 2001, it did nothing for a decade plus.

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

#95

Post by hogFeast »

smabie wrote: post #74
hogFeast wrote: post #30

It is worth understanding that the European stock market, bar the UK and possibly Sweden, isn't like the US. Most companies finance themselves through banks. Whilst Europe as an economic unit is larger than the US, capital markets are still basically non-existent (bar the efforts of the ECB to throw cash at anyone who raises money from capital markets). Also, the rise of tech stocks is significant not only relative t…

Yeah, a lot of people don't realize how market cap weighted actually gets you a not very diversified portfolio. For example, if you hold the S&P 500, about 8% of that is Apple, 6% is Amazon, 6% Microsoft, and 4% Google. So 25% of your capital is going to 4 names, all in the same sector. Meanwhile, the smallest holdings will be under 1%. Though market cap weighted is good for avoiding trading fees (you don't have to r…

The size factor has lost money pretty consistently. It is also a very suspicious factor generally because there are very obvious non-risk factor explanations (i.e. liquidity). Just generally, FF do very irrational things with their models (i.e. not including momentum)...they are credible but the way they do things is obviously not quite correct (Fama spent decades saying this kind of thing was totally impossible).

Market cap weighting is fine, if you actually end up with something reasonable...which you don't anymore. I wouldn't really recommend equal weighting either...so...

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

#96

Post by nightski »

hogFeast wrote: post #94
nightski wrote: post #75

Earlier quoted context omitted.

No, it dropped 75% in 2000 due to the dot-com bubble. If you started in 2001 you actually had a 60% gain by 2010.

January 2000 - $60 January 2010 - $30 I did just eyeball it from a few months before. And note, I said 2000...not 2001. And even at the end of 2001, it did nothing for a decade plus.

Stocks split. You can't just look at price. They also pay dividends.

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

#97

Post by hogFeast »

nightski wrote: post #96
hogFeast wrote: post #94

Earlier quoted context omitted.

January 2000 - $60 January 2010 - $30 I did just eyeball it from a few months before. And note, I said 2000...not 2001. And even at the end of 2001, it did nothing for a decade plus.

Stocks split. You can't just look at price. They also pay dividends.

What? Any price history you look at is going to be split-adjusted. And okay, you got a $1 of dividends...you only lost $29/share out of the $60 you invested.

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

#98

Post by barrenko »

kergonath wrote: post #83
libertine wrote: post #42

Earlier quoted context omitted.

It's still miles away from what's done in the US/China. Like, the whole TikTok thing is being ridiculous, in my point of view. For example, strategic assets for the EU are airlines, or automotive industry, it's where you've seen government intervention. But I'm not saying it's a good thing! In my country China bought the only Energy company we had - how isn't this considered a strategic asset? Sometimes I think EU is…

Definitely agree with you here. It's insane to see one country sell all its energy providers —and communications, and infrastructure— to foreign interests. Some European countries have an unhealthy disdain for state control (and state ownership), which contaminated too many levels of the EU. So they end up playing by the rules when their competitors most definitely aren't.

It's not disdain for state control / ownership, but that officials are easily bribed and bought off. Add the historical reasons why EU was founded and voila.

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

#99

Post by mercer »

Silhouette wrote: post #77
tonyedgecombe wrote: post #65

Earlier quoted context omitted.

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

Starting a business here is easy. Growing a business here is harder. You want an office? Welcome to the wonderful world of business rates, commercial lettings, site security, ever-changing transportation and infrastructure arrangements that will be largely out of your control, etc. Hiring your first employee? Welcome to employment contracts, documenting policies for things like grievances and disciplinary actions tha…

While I can't tell how you feel about these things, most of it sounds pretty good, from an employee perspective.

Sure, there's stuff that is infuriatingly misguided, but all in all I rather like living in a place that puts the onus on the employer when it comes to all sorts of financial and practical issues that an employee might deal with.

I definitely don't want things to be more like the US, much as it complicates things for myself as an entrepreneur and employer.

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

#100

Post by Silhouette »

mercer wrote: post #99
Silhouette wrote: post #77

Earlier quoted context omitted.

Starting a business here is easy. Growing a business here is harder. You want an office? Welcome to the wonderful world of business rates, commercial lettings, site security, ever-changing transportation and infrastructure arrangements that will be largely out of your control, etc. Hiring your first employee? Welcome to employment contracts, documenting policies for things like grievances and disciplinary actions tha…

While I can't tell how you feel about these things, most of it sounds pretty good, from an employee perspective. Sure, there's stuff that is infuriatingly misguided, but all in all I rather like living in a place that puts the onus on the employer when it comes to all sorts of financial and practical issues that an employee might deal with. I definitely don't want things to be more like the US, much as it complicates…

It is good from an employee perspective. For example, in a country where a lot of people aren't saving enough for retirement, there is logic in saying that employers must make pensions available to their staff as part of their compensation package.

The problem, as always with these things, is that this only helps you if you're employed in the first place. If the burdens of taking on a new employee, particularly the first one, are too high, then that lifestyle business run by its founders will remain a lifestyle business run by its founders, possibly for years or even forever.

Similarly, if you're a customer shopping for clothes online at the moment, it's great that UK consumer protection law requires vendors to give you 14 days after delivery to change your mind and cancel the purchase, and the vendor must accept the return without charge if you do. You can buy multiple sizes or colours to try things on, or just try a few different styles to see what you like, and then send the rest back, and all it costs you is a bit of postage.

It's less good as a merchant, when the reality is that a significant fraction of your returned items will come back unfit for resale and unless you can prove they didn't reach the customer already in that state you'll still be on the hook for the refund. Even for goods that do come back in as-new condition, you'll still have to go through the whole restocking process and you'll be missing that stock for as much as 28 days. Generous return policies didn't matter quite as much a few years ago when the law was introduced, as most people were still shopping for their clothes in bricks and mortar stores and would try things on in-store before buying. Right now, with fashion retailers going bust all over anyway, this surely isn't helping.

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