Why does tech make it riskier?
The stock market never goes down anymore
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DublinHead54
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The index is weighted by market cap, so Amazon, Google, Apple, Facebook, Tesla account for ~25% of the index. So buying the S&P500 gives a concentration to tech stocks.
Tech stocks are generally considered high growth and thus riskier than say a Proctor & Gamble.
Paul O Mahoney
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Absolutely ,I worked over 10 years in this industry and I can always remember in the early 90s some of those from Houston saying that the price of oil, and by extension gas, would stay uneconomic for decades ahead, cost of finding and exploiting. In those days a 30 day drill off our south cost was about $15m off the west coast $60m ,today I believe its 4/5 times those. Costs have gone up and will continue to go up and as we see today windfall taxes can be applied at any time.
As for price its ,as you say impossible to predict and the price is influenced by so many unknowns.
I have never held energy/oil stocks except for the ones we got as part of a Revenue scheme.
Steven Barrett
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Over the last 10 years, the S&P 500 and the FTSE 100 have had similar volatility but the S&P 500 have vastly outperformed.
Steven Barrett
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galway_blow_in
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absolutely not , the UK market is very badly diversified for the current age , its top heavy with dinasaur industries like banking and energy which have not had decent growth in years which explains why the FTSE has delivered so poorly this past two decades , its Tech constituent is very small , Tech is going to be the most important sector for years to come
the FTSE is known as "Jurasic Park" in the financial industry
Yes it's smaller than the S&P 500 but so are all the eurozone indexes, you could say same about Germany and France.
Technology will always be important but different technologies now not the same ones that have dominated since the financial crash focused on communications and social media . Energy and food are now the critical areas that are not the focus of today's tech behemoths. Therefore there will be rebalancing in world financial markets back to these "old world " stocks that are now very important again and still undervalued and away from pandemic era tech stocks. Although new technology stocks will come to the fore just like after the dot com bust.
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DazedInPontoon
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Old world industries will never scale like software does and physical systems will never be as practical as the digital systems that replace them. You might have a real tech breakthrough in energy with something like fusion that gives orders of magnitude improvements over existing energy sources, but I expect that's very unlikely with food.
In the long run I expect the best gains to continue as they already have in the tech revolution era with software/big-data/AI continuing to disrupt other industries and create new ones.
Tech had it too easy lately though, too many bad/unprofitable startups with effectively infinite runway and now the wheat is being separated from the chaff.
In the long run I expect the best gains to continue as they already have in the tech revolution era with software/big-data/AI continuing to disrupt other industries and create new ones.
Tech had it too easy lately though, too many bad/unprofitable startups with effectively infinite runway and now the wheat is being separated from the chaff.
galway_blow_in
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Germanys DAX has been far and away the strongest performing European index this century , obviously not as strong as the U.S market but unlike the UK market , its not heavily weighted by banks or energy companies , the rest of the european markets have done horribly as well with Spain and Italy about half the level they were in 2007 , Italian market all time high was way back in 2000
buying the U.S market and nothing else is more or less fool proof over the long term
But that has been a very crowded place to be investing especially since the pandemic , the US market is simply overvalued and the European ones uncluding the ftse are undervalued precisely because they are heavy in these old world stocks. Investors were simply over optimistic about the prospects for these tech stocks facilitated by zero interest rates and QE.
The opposite happened with old world stocks like energy and financials that make money today not in the future ,look how ridiculous lly they were priced as recenly as 2020, these stocks are now being revalued as they are more valuable in the era of high inflation and rising interest rates.
Aswell as that technology has barely made any inroads in alot of areas that are now critical like energy. Another poster mentioned nuclear fusion as a new tech , but this stuff is still way too difficult and far off into the future ,the Googles and Facebooks will have zero inroads into any of this stuff
galway_blow_in
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energy is a long term dead duck , the climate agenda guarantees this , right now is just a blip though obviously could last a few years
thats not to say people wont still use oil , they will of course but the investment community will lighten up on energy just as they have lightened up on tobacco stocks etc despite people globally still buying cigarettes
But tech hasn't disrupted in energy, food , and commodities . Yes there has been technological developments in these sectors but only within those industries not from outside.
Many are saying that Tesla is a disrupter but the jury is still out on that given that it is only maybe disrupting on the consumption of energy but not in the generation of energy . Also electric car production and other high tech products are seriously restricted by access to crucial commodities that are controlled by the old dinasour mining companies and totalitarian countries like Russia
Gordon Gekko
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Big call to say the US market is overvalued now.
Google, for example, is trading at 18 times 2022 earnings.
Not “Spoof.com” or “WorldOfFruit.com”…Google.
Google, for example, is trading at 18 times 2022 earnings.
Not “Spoof.com” or “WorldOfFruit.com”…Google.
fistophobia
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Only one subset of the S&P 500 index is in positive territory, year to date.
S &P 500 is down by 20% whereas DOW down by only 10%, S&P has become very tech heavy over the last decade which explains why it is down more.
There were alot of people on this only looking to invest exclusively in the S&P over the last few years because of its performance driven largely by tech, that looks to have been a mistake if you weren't already on board before the pandemic .
There could be a bit of a short term tech rally but I doubt it changes the long term trend. Investment now needs to go to areas which have been under invested for decades as the West looks to re industrialise to reduce dependence on Russia and China
There were alot of people on this only looking to invest exclusively in the S&P over the last few years because of its performance driven largely by tech, that looks to have been a mistake if you weren't already on board before the pandemic .
There could be a bit of a short term tech rally but I doubt it changes the long term trend. Investment now needs to go to areas which have been under invested for decades as the West looks to re industrialise to reduce dependence on Russia and China
DazedInPontoon
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The disruptions started with the low hanging fruit which is things that can be dematerialised. Previously physical things such as snail mail, media, money, books, photos being replaced by digital counterparts which were more efficient. You can even generalise that to say they're all different forms of data that have a large global user base. Maybe most of this wave is already over.
When all the data is digital, the next wave of disruption relates to analysing that data and providing services based on it. Your physical map got replaced by a sat nav in your car, that was the data part. Now you can ask it contextual questions like where the nearest petrol station is, or use an even more advanced service such as corrberating data from other peoples cars to know real time traffic situations, and an even more advanced service calculate your optimal route in real time based on that traffic data.
I think there is lot disruption left to happen in this regard in areas from education to health care. We are gathering a lot of data in all aspects of life now that we were not before but are probably not using it as much as possible yet.
Energy, food and commodities can generally not be dematerialised, they are not data. So while you might see disruption in them it's not exactly the same kind, but it can still be big and from the outside. It's not farmers that came up with lab grown meat for example, and it wasn't one of the leading legacy car companies that really kick-started the EV revolution.
I'm more interested in software disruption, as nothing scales like software.
You might be underestimating the changes that are caused by the EV revolution that Tesla started. For example, one side effect is that way more R&D effort has gone into battery tech, I wouldn't be surprised if we end up with batteries that no longer need lithium or other scarce resources. I heard something interesting related to this recently, but I can't find the source I'm afraid.
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That goes without saying, people need to eat real food you can't "dematerialise" food and satisfy people with virtual food.
There was a technological revolution in agriculture after WW2 but nothing much in the last few decades. The Googles and Facebooks will have little encroachment and little interest aswell in agriculture.
Lab grown meat is ridiculously expensive and very difficult to scale up, even if it did become possible it would require a huge industrial complex to produce . Surely if it is to be a runner it would need to replicate what cows do to convert vegetation like grass to meat. Therefore that would entail harvesting of that vegetation and transporting it to the "meat factory ". That would in itself be an enormous task
If I see the tech companies investing 100s of billions of dollars in electricity generation technology, agriculture and mining I will change my mind. As of now the technology companies are not really interested as you said yourself
They are only interested in picking the low hanging fruit
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DazedInPontoon
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Yes things that must remain physical such as food are much more difficult to disrupt and will never scale up like software does...so I'd prefer to invest in disruptive software companies who are picking low hanging fruit.
fistophobia
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I am not going to say what subset of the index is in positive territory.
Because I was roundly criticised and ridiculed on this website for following this investment strategy.
It is my core holding.
Because I was roundly criticised and ridiculed on this website for following this investment strategy.
It is my core holding.
I think the battery technology you may be referring to are solid state batteries. These may very well be the next frontier in energy storage. The economist did a very good feature on this area earlier this year/ maybe late last year, with the pros & cons of existing & emerging technologies, and the likely time when they are likely to go mainstream . Ss battery technologies not quite there yet as a battery replacement iirc, (manufacturing & preservation issues, etc), so current lithium ion battery technology will be with us for a good while yet. (Again iirc)
Japanese companies want to win back their battery-making edge
They think that solid-state technology will help them do so
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