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Businesses EU The Almighty Buck United States

US Tech Stocks Are Now Worth More Than the Entire European Stock Market (cnbc.com) 77

Posted by BeauHD from the noteworthy-milestone dept.
An anonymous reader quotes a report from CNBC: The dominance of major U.S. tech stocks in recent years has pushed the sector past another milestone as it is now more valuable than the entire European stock market, according to Bank of America Global Research. The firm said in a note that this is the first time the market cap of the U.S. tech sector, at $9.1 trillion, exceeds Europe, which including the U.K. and Switzerland is now at $8.9 trillion. For reference, the firm said that in 2007, Europe was four times the size of U.S. technology stocks.

Tech pulling ahead of the European continent comes as the U.S. market has become increasingly concentrated in mega-cap tech stocks, worrying some market strategists. The five biggest tech names -- Apple, Microsoft, Alphabet, Amazon and Facebook -- accounted for 17.5% of the S&P 500 in January, and the rotation into tech during the coronavirus pandemic has pushed that number well above 20%. Consumer tech goliath Apple is worth more than $2 trillion by itself. The run for Amazon might be the most stunning of the group. The company has been growing into a dominant force in e-commerce since the 1990s, but the explosion of the cloud computing industry has helped its stock surge over the past decade. Its share price was about 20 times higher on Thursday than it was in August 2010.
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US Tech Stocks Are Now Worth More Than the Entire European Stock Market More

US Tech Stocks Are Now Worth More Than the Entire European Stock Market

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  • Reminds me of Japanese real estate (Score:5, Insightful)

    by shanen ( 462549 ) on Friday August 28, 2020 @04:38PM (#60451066) Homepage Journal

    First reaction was to remember when the real estate in Japan was worth more than the United States. I think the peak was around 1990, and the doomsayers were running about predicting Japan was going to buy up everything in America, and they definitely did make some YUGE deals (but none that I can recall that involved Trump). Turned out it was a YUGE bubble, and Japan spent about 20 years getting over the burst.

    I think we have the same thing now. A few tech companies are HUGELY overvalued based on (1) the leverage of extreme expertise replicated on a large scale using computers, (2) confidence that the federal government is going to prevent the stock market from crashing, and (3) lack of any better places to park the money right now. But that's the problem with bursting bubbles. They don't listen to reasons.

    Only a question of timing. However, if you can figure out when the bubble is going to burst, you could get seriously rich. Before or after the election? I think it may depend on how annoyed Xi is. He has the biggest pins of various sorts, and could even consult with real acupuncture experts.

    • if you can figure out when the bubble is going to burst, you could get seriously rich.

      Depends on the severity of the crash. If it's big enough to take all the banks out (as nearly happened in 2008), everybody loses.

      • Re:Reminds me of Japanese real estate (Score:5, Interesting)

        by shanen ( 462549 ) on Friday August 28, 2020 @05:05PM (#60451186) Homepage Journal

        No, that is not true. Some players made gigantic profits on the crash in 2008. The stock market has become an insane game and you can bet any way you like. The book Skin in the Game says a lot about what goes wrong with those sorts of games.

        Right now the players are mostly gambling on other people's deaths with other people's money. Those are nasty players, but it's also contributing to the bubble. I focused on the tech side because the story does.

        Returning to my example, most of my personal anecdotes are actually American, going way back to a period when I was deeply involved in commercial real estate in the States. In the bubble I remember best, the smart players had gotten out before the bubble burst. Each buyer in the chain had borrowed more money, but in the end only the last buyer was forced into bankruptcy and the banks were left holding the relatively worthless properties. Certainly much less than the value of the last loans. The smart players had already taken their money and run away. (I was just a programmer, not a player, but I think and hope I contributed to the survival of the brokerage I worked for.)

        Word of caution: I think some companies have even less underlying value than a parcel of vacant land.

      • If it's big enough to take all the banks out (as nearly happened in 2008), everybody loses.

        Except those who hedged their bets with good ole' physical, aka bullion. Flag

      • 2008 is a tiny blip compared to whats been happening in 2020.

        Oh and good luck to anyone actually wanting to -sell- those tech stocks.... rofl.

    • No, the value is real (Score:4, Interesting)

      by rsilvergun ( 571051 ) on Friday August 28, 2020 @05:01PM (#60451166)
      tech stocks are hugely profitable because you have a handful of employees responsible for billions and billions of dollars in revenue. Software is eating the world.
      • No, software is worth next to nothing. Most of the money is in the software-enabled services.

      • Re: (Score:2)

        by shanen ( 462549 )

        Basically concurrence and I think you are saying what I was trying to say in my first enumerated point, though perhaps you worded it better. My concern is that the REAL economy is much bigger, but by focusing on the stock market Trump can pretend the rest of the economy doesn't matter.

      • No, delusionary thinking is eating the world. If you look at what's being traded, in Europe it's companies who make physical plant that has, and keeps, its value. In the US it's companies who make software for warning people about Satan-worshiping pedophiles running a global child sex-trafficking ring who are being fought by Donald Trump.

      • Re: (Score:1)

        by Anonymous Coward

        Well, that and no one else is even allowed to compete with the US because the US abuses it's position for gross protectionism.

        Try and pull up US tech companies on pushing European competition out of business by not paying taxes owed giving them unfair advantage? We're told change the tax law.

        So we change the tax law and guess what? Trump threatens to sanction us for daring to be sovereign states that are free to determine our own tax laws to tax revenues made in our economy.

        What happens when a big country p

    • However, if you can figure out when the bubble is going to burst

      You mean like when the bubble burst just a few months ago in March 2020?

      • That wasn't a bubble bursting. That was the uncertainty of how bad the virus was going to be. Was it going to last 3 months, or 3 years, and was the death count going to be in the 10s of thousands or the 100s of millions. Once we got a little better understanding of the scope, the market just went right back to bubbling. Move along, nothing to see here.

    • Quite true. There was even a shitty Michael Crighton book about it, and an even worse movie.

  • So much for the "free market..." (Score:5, Interesting)

    by bogaboga ( 793279 ) on Friday August 28, 2020 @04:59PM (#60451146)

    The dominance of major U.S. tech stocks in recent years has pushed the sector past another milestone as it is now more valuable than the entire European stock market, according to Bank of America Global Research.

    See what all that Quantitative Easing can do? So much for the much parrotted free market

    The government poured trillions into the market. What did you expect? Trickle-down economics?

    If other countries do the same, Uncle Sam blames them for not following "free market principles."

    Why is this even news?

    • The government poured trillions into the market.

      Is still pouring trillions in, one trillion every month. And this heist is going totally unnoticed. The headlines are designed to distract us from it, and it's working like a charm

  • Pop (Score:3)

    by Rosco P. Coltrane ( 209368 ) on Friday August 28, 2020 @05:05PM (#60451180)

    Let's see how much it's worth after the bubble pops, shall we?

  • Whelp.. time to break them up, I guess. (Score:4, Insightful)

    by Rick Schumann ( 4662797 ) on Friday August 28, 2020 @05:06PM (#60451190) Journal
    They're too powerful. Time to force them to break up into smaller companies.

    • Re:Whelp.. time to break them up, I guess. (Score:5, Interesting)

      by DontBeAMoran ( 4843879 ) on Friday August 28, 2020 @05:49PM (#60451318)

      It would be interesting to put laws in place to prevent companies from making more than one of the following:
      - hardware
      - operating system
      - executables/programs/applications/apps (use whatever word is proper for your generation, it's all the same fuckin' thing- but remember that on MS-DOS and Windows, the ".EXE" extension was chosen for a reason)
      - online services

      The only way for this to happen would be open standards, open APIs, open everything. That's why it's never going to happen. We're lucky that email and Web were developed before companies started making things proprietary.

      • Re: (Score:1)

        by guruevi ( 827432 )

        They'll just split off into smaller companies that work together, kind of what happened after they split up Ma Bell, a few decades from now, they'll merge back together.

      • That would really be stupid. Imagine if Tesla (just for example) couldn't write software to run the dashboard of a car. No new product would ever get off the ground. That would be a horrible future.

      • Re: (Score:2)

        by dryeo ( 100693 )

        We're lucky that email and Web were developed before companies started making things proprietary.

        Actually, it was luck that the government and universities created and used open stuff with good timing.
        At one point things were going proprietary, AOL, Compuserve, Prodigy. Then Win95 was released with no internet stuff to mention, instead MSN with the plan to leverage Windows to win the private network competition. People wanted open, if only due to price, and the internet won. Now the internet is getting fragmented into propriety parts, with the help of governments, mostly China and America.

  • Go public services for the next couple of decades when the poor have to bail out the rich yet again. I guess billionaires profits are more important than things like education & infrastructure.

  • Comment removed (Score:3)

    by account_deleted ( 4530225 ) on Friday August 28, 2020 @06:10PM (#60451364)
    Comment removed based on user account deletion

    • You are right - it's not. It's time we all redefined valuation to reflect a common-sense meaning of the term. Maybe involving a multiplier of liquid assets.

      Uber is valued at 59B. With access to just half that cash, they could probably buy the top 3 gold mines of the world, pleasing their shareholders with better returns, while simultaneously funding the rest of their business.

      But right now, Uber's business assets basically amount to IT infrastructure (software, servers and apps) and the goodwill of their cu

      • I am not sure what you would call a "correct" valuation in any objective sense. In a free market, goods are worth what people think they are, which is of course a subjective view. Financial bubbles can occur under this system. I would have thought that people would have got used to that by now. But unfortunately, people can be blinded by greed. I do not know of any economic science that could replace this market system. I am pretty sure a magic valuation formula would be grossly unfair and unproductive.

        • Re: (Score:2)

          by dryeo ( 100693 )

          The problem is the lack of a free market. The successful capitalist aims to corner the market and make it unfree, by various methods such as buying up the competition, leading to a few big companies instead of a bunch of competitors.
          Now we have the government printing and borrowing money to prop things up, as well as keeping interest rates too low.

  • TINA (Score:3)

    by hdyoung ( 5182939 ) on Friday August 28, 2020 @06:11PM (#60451370)
    TINA = "there is no alternative"


    Where else am I going to put my retirement money and the contributions from my employer? It used to be stocks+bonds, but the bond market has been gutted by the zero-negative interest rates in place across the world. That means bank accounts and CDs are underneath inflation as well. What else is there to invest in? I could try real estate, but that's super hard to get in and out of if things go bad. Very, very illiquid. So.. virtually nothing else to do but buy stocks.


    When other asset classes get back online, stocks are in for a NASTY correction.

    • Re:TINA (Score:5, Interesting)

      by Frank Burly ( 4247955 ) on Friday August 28, 2020 @06:38PM (#60451444)

      You are correct, or at least Paul Krugman agrees with you. According to him, the dearth of options is the reason for the spike in gold. I think crypto is also getting a boost. It's a lousy time to start most businesses, at at least when you buy MSFT at a 40/1 PE, you know they'll be around in a few years.

      It is worth noting that the Trump administration bought a quarter-trillion in corporate bonds, https://markets.businessinside... [businessinsider.com] which I have to think is good for the balance sheets of the companies in question (and probably good for the US balance sheet as well). But if you complained about the GM bailout, get ready to make a much longer list.

      • Real estate might be bubbling, too. Where I live the housing prices have exceeded 2006 levels. There has been very little real inflation in that time, too. I would be very cautious about real estate investments.

        The fact that everyone is worried about a bubble is a sign that it is about to pop. Regulators should have spent the last five years raising interest rates and taxes to prepare, which would have motivated people to invest in bonds and slow the stock investments. As usual, the politicians in charge we

        • I keep waiting for real estate to pop again: fewer Chinese investors, fewer Air B&B guests, fewer people you'd want to rent to. But I think RE benefits from an unstable economy, in that it is a tangible asset and one that people can comprehend the value of.

        • Real estate pricing reflects the idea that what you are buying is an investment, not just a place to live. Consider the fine art market. The goods have no intrinsic utility, and yet attract prices in the millions.

        • Re: (Score:1)

          by guruevi ( 827432 )

          This time real estate is actually driven by demand. I see the prices going up here too because people want to leave the nearby cities after recent burning, looting and murdering. There isn't enough real estate in the suburbs to actually accept all these people, so prices go up. It's even worse in LA, Seattle and Portland right now, where suburb average prices, that were already extremely high went up over 10% in the last few months and demand rose 50%.

    • It's more than that.

      How many people own mutual funds and just sit on them, how many own index funds that are even less reactive to the market? That money has to go somewhere, and with every non-tech company definably bad for the foreseeable future the money is shifting to the only parts that aren't definably bad.

      Apple strikes me as particularly insane. They're fundamentally a luxury brand, not only do their products cost more than their competitors, but their typical customer is simply updating an existing

  • What is this language usage? Rotation into tech? What is rotating? The stock market? It fluctuates, but I don't know about any rotations.

    I could care less about the content of this article, so I'm just going to nitpick the business-related gobbledygook, instead.

  • The prices are artificially propped up by the fed. The American Stock Market is entirely fraudulent, not that you can't make a few bucks, but it's all smoke and mirrors. You won't know its true worth until the fed's well runs dry

    • "It's all smoke and mirrors" could be America's tagline.

      Politics, wrestling, tits, food and flavors, walls, businesses, Las Vegas Eiffel tower replicas, you name it. ;)

  • Only in the US is "worth" some bullsbit number of money, made up by professional gamblers to trick dumb fucks into making it "real worth", completely unrelated to the actual real things that business is actually doing and owning, just to make it grow exponentially in an imaginary curve that will horribly explode when the disparity will become too much even for the dumb fucks.

    Which should have happened a long time ago, bit the last time it happened, you replaced the cork on the supervolcano with an even larg

  • Due to inflation and horrible interest rates on normal savings accounts, we have no other choice but to 'invest' unless we want our savings to lose value. Thanks a lot big banking, big corporate, and big government!
  • Comment removed based on user account deletion

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