Barron’s: Buy the Big Five.

“Investors should own them all, even if the regulatory headwinds take a while to abate.”

From Eric Savitz and Max Cherney’s “Big Tech has hit a perilous moment. It won’t last.” ($) posted early Friday on Barron’s Tech and on the cover of this week’s magazine:

Over three days in late July, America’s tech giants put on an impressive show. Apple, Microsoft, Alphabet, Amazon.com, and Facebook had thrived in the pandemic, and their latest earnings reports hammered home the point. The five companies generated a combined $332 billion in revenue from April to June, up 36% from a year earlier. All of their profits were better than expected. The twist is that all of their stocks, save for Alphabet’s, sold off on the news.

The negative reaction reflects the paradox surrounding America’s Big Tech complex. Their products are being used more than ever, just as the companies have become increasingly disliked. Regulators and lawmakers—cheered on by a bipartisan mix of constituents—are scrutinizing each business and threatening significant actions to curtail their power. Evercore ISI analyst Mark Mahaney estimates that the regulatory scrutiny has already created a 10% drag on large tech stocks…

Big Tech has hit a perilous moment. It won’t last. The five megacaps still have the best business models on the planet, and their stocks look relatively cheap. Investors should own them all, even if the regulatory headwinds take a while to abate.

Taken together, the five tech giants—the largest companies in the U.S. stock market by a wide margin—offer a way to invest in the global economy’s most important trends: digital transformation and cloud computing, and the future of communication, entertainment, commerce, and work.

My take: From Barron’s cover to Wall Street’s ears. All five stocks popped Friday.

apple barrons buy big 5

4 Comments

  1. Romeo A Esparrago Jr said:
    “ America’s tech giants put on an impressive show. “
    The show must go on. For Apple, its impressive acting performance continues on the Big Tech stage. Buy those tickets before they’re sold out. Break a leg.

    4
    August 21, 2021
  2. Jerry Doyle said:
    The matrix that binds these companies successfully with humanity is their capacity of enabling interaction through communication, commerce, learning, research and stimulating synergy through human beings that simply were not possible in the era of mass media. These companies are where humanity buzz. The populace embrace these companies, but the democratic governance and authoritarian regimes fear them. It is the latter calling for increased regulatory oversight, not the former. We all feel some degree of trepidation and awe of them, simultaneously mesmerized by the drama they unfold while paralyzed by the uncertainty in us they present. Where are they taking us? That is the question many are asking and they don’t have the answer. Thus, the calls for increased regulatory oversight. That’s a losing proposition for the calls are not coming from the populace, but from the elites who want to retain their influence and power over the masses. I am betting on these companies to prevail.

    2
    August 21, 2021
  3. Gregg Thurman said:
    All five stocks popped Friday.

    But not enough to prevent a loss for the week. I was very profitable on Tuesday, declining a bit Wednesday morning, then boom a knee jerk reaction to a policy clarification WS had been asking for.

    Bailed Thursday morning then bought and sold contracts in step ladder fashion, keeping my entry at 50c and selling at 80c. My last purchase, the $147/$148 sold at 97c. Net result, starting with the capital I salvaged (did not put more at risk) was that I cut my loss by 59%.

    That is the second loss in 12 weeks. I should point out, again, that I stopped trading until I thought the post April earnings craziness had ceased. This run reflects my results since resuming trading. My only other loss during this period came with the Market’s reaction to July’s earnings report.

    I should also point out that I dip into this account from time to time for big ticket items. Except for my AppleCard (that I payoff each month) I am debt free (including house). Options have made all this possible.

    4
    August 21, 2021
  4. Though I had to use a gauge, I see the cover illustration places Apple’s balloon slightly higher than Google’s. Yet Google is up 75% over the past 12 months to MSFTs 43%, FBs 35% and AMZNs (3%). I see no reason to diversify within this circle, seeking new investments far afield from US Tech giants. TSM’s 38% & EDIT’s 67% 12-month gains were worth the foray. My SEPP remains 90% Apple since ‘05 & I sleep well most nights! Oddly, I have a low tolerance for risk, besides keeping large hives of stinging insects.

    1
    August 21, 2021

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