Have tech stocks lost their bite?
Facebook, Amazon, Apple, Microsoft and Alphabet – the five biggest companies on earth, collectively responsible for 23% of the US market. This is a staggering jump from the 17% which the big five were responsible for this time last year. And while it looks like these companies can’t be stopped, is it a case of: "what goes up must come down?"
To generate annual returns of 10% return over the next five years, these stocks will need to generate US$4 trillion. For context, this is equal to the market cap of the next 13 companies of the S&P 500 including Visa, Mastercard, Johnson & Johnson and Berkshire Hathaway. Is this possible?
According to Adrian Warner, CIO at Avenir Capital, it may be possible but investors should be cautious in banking on the big five. While they're fantastic businesses, Adrian suggests better opportunities lie elsewhere and investors should keep hunting.
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Avenir Capital is an Australian based investment manager, specialising in value-oriented global equity investments. You can find out more by visiting their website.
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