Tech's reality check: How the industry lost $7.4 trillion in one year

[Kennah]

This discussion thread was locked as off-topic by Lasher (a host of the Latest Breaking News forum).

Source: CNBC

At this time in 2021, the Nasdaq Composite had just peaked, doubling since the early days of the pandemic. Rivian’s blockbuster IPO was the latest in a record year for new issues. Hiring was booming and tech employees were frolicking in the high value of their stock options.

Twelve months later, the landscape is markedly different.

Not one of the 15 most valuable U.S. tech companies has generated positive returns in 2021. Microsoft has shed roughly $700 billion in market cap. Meta’s market cap has contracted by over 70% from its highs, wiping out over $600 billion in value this year.

In total, investors have lost roughly $7.4 trillion, based on the 12-month drop in the Nasdaq.

Read more: https://www.cnbc.com/2022/11/25/techs-reality-check-how-the-industry-lost-7point4-trillion-in-one-year.html

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May I interest you in some tulips

[underpants]

1. Tulips

Excellent reference

[dalton99a]

2. Kick

The Covid-19 bump didn’t, in fact, change forever how we work, play, shop and learn. Hiring and investing as if we’d forever be convening happy hours on video, working out in our living room and avoiding airplanes, malls and indoor dining was — as it turns out — a bad bet.

[PSPS]

6. Um, get back to me about that in a year or two.

The tail is still trying to wag the dog but it won't last.

[republianmushroom]

3. Damn, that 's a lot of money

[Crowman2009]

4. Like music and movies, people got tired of having to buy new equipment.

[bullimiami]

5. They lost nothing. It's all just imaginary capital. It was imagined to be more now imagined less.

[muriel_volestrangler]

8. +1. The theoretical total price of buying it all has gone down

The market capitalization of any one company is still rather theoretical, since very rarely is it sold in one go. It's just bits of it, regularly traded. Adding them all together is even less like reality. It's just a measure of confidence, rather than a loss (or a gain).

[bullimiami]

18. Right and they theoretically lost money they only theoretically had.

[vlyons]

7. Why are tech companies unprofitable?

nt

[muriel_volestrangler]

9. Some of them are very profitable

In 2020, of the world's most profitable companies:
#1: Apple
#3: Softbank (invests in tech)
#5: Microsoft
#7: Alphabet (Google, YouTube)
#10: Facebook

[progree]

10. Very scary. Over past 10 years Vanguard's Info Technology Index grew just barely 5.570-fold

For a 18.7% average annualized total return (includes distributions through Friday's 11/25/22 close).

Over past 18 years: it grew 8.682 fold (12.8% annualized total return)

The fund started about 18 1/2 years ago so I can't go back any further. I like using funds because they include dividend and other distributions and are returns after expenses. In other words, just what a regular person would get. And I prefer index funds for this kind of history because it doesn't depend on someone's stock-picking skill, but rather is a measure of the total sector just as it is.

https://finance.yahoo.com/quote/VITAX/history

Use the Adjusted Close column to get the total return including distributions.

A lecture on equity investing - https://www.democraticunderground.com/111694222#post5

I am a little bit sick and I am a little bit tired of investing in equities being equated to tulips or "the Wall Street Casino". Historically, innumerable studies and simulations have shown that one's chances of running out of money in retirement is much less for people with equities than those in pure "safe" fixed income investments. I choose not to gamble on a "safe" fixed-income only portfolio, no matter what the perma-bears say.

I was able to contribute far more to Democratic candidates because of investing in equities than I would have been in just "safe" investments. Had I done the latter, I would have been struggling to get by.

[FredGarvin]

11. The fund is getting crushed

Down 25% from its recent high a year back.
Once was down 41% from its high this year.
A true casino stock

[progree]

13. You apparently didn't read my post. I know that tech has done very poorly in the past year, but

it has done very very well in longer periods THROUGH THE PRESENT (11/25/22 close). Equity investing has its ups and downs, but like I say, over the long run, like the past 10 years and since inception 18 years ago, it has grown 5.570-fold and 8.682-fold respectively. Yes these performance numbers include the past year.

Casino stock my ass. For one thing it's an index fund that measures the information technology sector overall. A sector that has done extremely very well, though it occasionally has some very negative years. Just like the S&P 500 or any other equity index. It is not "a stock".

For more on equity investing's vast superiority over fixed income (casino my ass) --
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

[FredGarvin]

15. Of course fixed income underperformed

Its tied to the Fed Rate which is absurdly low.

I understand your frustration. I've been investing for over 40 years now, and do so actively.

[NullTuples]

12. Ordinarily I'd say, "who cares, they're profiting off ups and downs" - but there's a difference now.

Since the mid-1990's private equity companies have been raiding corporations for their pensions among other components of value. All while they and other large investors convinced the public that pensions are bad, and the best way to plan for retirement is to bet on the stock market. A stock market they in no small part control via board seats, direct manipulation of prices, futures shorting and purchasing legislators.

It's a con. It's all been a con ever since Reagan.

[progree]

14. I do agree that replacing defined benefit pensions with 401k's was a screw job --

companies invest a lot less in 401k's (the match and usually plan administration cost), than they did in pensions in the old days. Workers get stuck with trying to figure out how to make up the difference.

But I absolutely don't agree that investing in equities is a poor plan for retirement.

Historically, innumerable studies and simulations have shown that one's chances of running out of money in retirement is much less for people with equities than those in pure "safe" fixed income investments. I choose not to gamble on a "safe" fixed-income only portfolio, no matter what the perma-bears say.

A lecture on equity investing - https://www.democraticunderground.com/111694222#post5

[FredGarvin]

16. Exactly.

Remember the days when you could invest in savings accounts?
Savings bonds?

Drive into NYC from Conn any work day and you'll see all the usual black limos going to Wall Street...streams of them.
Providing nothing while scalping American investors.

[progree]

17. You still can -- I bought an I-bond (a form of savings bond) in August

and a TIPS (Treasury Inflation Protection Security) this month.

Remember the days when you could invest in savings accounts?
Savings bonds?

Though with their still skimpy interest rates, yeah, they aren't much of an investment. Although at least both (I-bonds and TIPs) keep up with inflation and a little extra, but that's it.

I remember getting a 6 year CD in 1985 with a 12.8% interest rate. Even in the early 90's ones over 9%.

"Drive into NYC from Conn any work day and you'll see all the usual black limos going to Wall Street...streams of them.
Providing nothing while scalping American investors."

I don't doubt they make more than their share. But there's plenty left over -- that's why I link to index fund performances -- these are AFTER expenses, these are AFTER the front-runners have taken a chunk. That are the returns the little investor gets.

It's of course not just equities. We've suffered for more than a decade with sub-two percent interest rates on savings bonds, savings accounts, and CD's. Sounds like people who invest in those are being fleeced. Big time.

The Fed's interest rate sets a FLOOR on short term interest rates. On the other hand, it's true that all the quantitative easing (the Fed buying bonds) has forced interest rates down all across the longevity spectrum since they started that in the aftermath of the housing bubble burst.

[Lasher]

19. Locking

This is analysis.

No analysis or opinion pieces.

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