Taps Coogan – December 28th, 2021
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The following chart, from Top Down Charts via ISABELLNET, shows US equity performance relative to global equities excluding the US.
With nearly every large cap tech company founded in the last 30 years domiciled in the US or China and with Chinese tech companies enduring Xi’s turn back towards Marxism, the chart above is basically a proxy for tech vs value.
Indeed, the chart above is almost a mathematical inevitability of a world awash in liquidity but short on growth and one in which Europe’s large but stagnant economy has missed out almost entirely on two tech innovation cycles.
Of the top 20 tech companies in the world by revenue in 2021, companies that essentially define the modern economy, exactly zero are domiciled in Europe. In the time that Microsoft, Facebook, Apple, Google, Samsung, Netflix, Oracle, Tesla, Twitter, Ebay, Paypal, Tencent, ByteDance, Huawei, Sony, Alibaba, etc… have become ultra-successful, profitable, ultra-large market cap companies, and household names, the EU has produced comparatively little: Spotify, SAP, and a few other companies. Indeed, the list of the largest 20 European companies, looks like a list from the US in the 1980s: oil companies, banks, luxury brands, and conglomerates.
When one considers that there is virtually no chance of EU heavyweights (France, Germany, Spain, and Italy) adopting the wide ranging pro-growth reforms needed to reverse their creeping economic irrelevancy, that China is now run by a genuine Marxist, that Japan is in the midst of major and seemingly irreversible population decline, and that India’s market – by far the most interesting of the lot- is still quite small, US outperformance makes a lot more sense.
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