3-way fork for tech sector
If you’re trying to lose money, this post is likely not for you
As a general thesis, I believe the tech market (growth tech, although mostly focused on large growth) has 3 likely outcomes in the coming 2-5 years. A general market recession would mitigate this thesis as what falls in a recession is somewhat of a crapshoot (yes, I know certain things people need during recessions, is it a new iphone or macbook? Probably not, but they have other growth avenues outside of fancy hardware.
Tech experience compound growth due to size. This is frankly my favored avenue the tech sector will take. There are a lot of acquisitions in the space, which is essentially less-risk R&D, imo. Essentially, you’re outsourcing specific branches of R&D to 100 start-ups all aiming to address a major problem.
The size also includes infrastructure. Although storage is growing at a rapid rate, there is infinite data, essentially. So, the powerhouse nature of these large growth tech stocks will continue to expand with this **massive** head start.
Tech is curbed by anti-trust and regulation. We’ve seen in before in financials and other sectors with specific anti-trust and regulation legislature. There’s an inkling, a very evident one, of bipartisan support for tech legislature. Who knows about a tech tax – it’s happening in Europe, but who knows if it will be appeasing to the voters and both parties. Old, grumpy politicians – from both sides of the aisle – do not know how to use an iPhone, let alone understand the complexities of legislature in the tech space.
Tech scales and levels the playing field. It sounds ironic to say, but the innovation in the tech space has been relatively centralized as of late (Tesla, Apple, Alphabet, etc.), however, I do believe there is a time in the short to mid horizon where the "knowledge" transfer from mega tech to start-up tech is going to increase at a rapid rate. This would potentially bolster small growth over large growth, but I do believe there will be a natural brain drain from mega tech which will synthesize into an explosion of tech start-ups with significant backing.
Obviously, this trend is happening and has been happening for sometime. I simply believe there will be an uptick and shock to typical FAANG investors who have seen explosive growth since the Great Recession.
Frankly, I’m an asexual, low-cost ETF holder with aggressive tilts in the portfolio, rather than an active investor, but I’d be interested to hear y’alls view of mega tech in the coming years.
TL:DR 3 options:
- Large growth tech continues to boom (60%)
- Regulation and the damn commies slow large growth and general tech (30%)
- Tech becomes more equal across the spectrum, shifting gains from large growth to other areas of the market (10%)
via r/wallstreetbets https://ift.tt/3qhG8Zq
August 19, 2021 at 05:10PM