A short TGIF as we enter the Easter weekend (or “Easter Triduum” in Church language).
I learned a new term this week*, “techlash” plus I found a couple of startling stats about tech – inspired by the mini- (soon to be major?) crisis going on with Facebook and the privacy of its users’ information. The situation is kind of unfortunate for those who may have given up Facebook for Lent….just in time for the #DeleteFacebook campaign to be kicking into high gear. (Full disclosure: I do not have a Facebook account.)
“Techlash” is the backlash that has affected the entire tech sector in response to Mark Zuckerberg’s – and Facebook’s – lack of response to their crisis which may spill over into other major tech companies’ operating models.
The Startling Tech Stats:
Stat #1: As most readers may know, there is a NY Stock Exchange index called FANG+. This index of 10 major tech stocks stands for the “Big 4 FANG” – Facebook, Amazon, Netflix and Google – plus Apple, Alibaba, Baidu, Nvidia, Tesla and Twitter.
The FANG+ index has become much more than a mere sub-index. These mega tech stocks move markets globally. For example, the FANG+ index alone on Wednesday was down -2.2% leading the overall markets to decline amidst a slightly stronger market for non-tech stocks. This works similarly on the upside.
Stat #2: In 2017, Facebook, Apple, Amazon, Microsoft and (Google parent) Alphabet accounted for nearly 25% of the entire year’s gains of the S&P 500 (and earlier this year for 45% of 2018’s earlier gains). This can work similarly on the downside. Note, diversification is advised.
Stat #3: Outside the US, Samsung is ONE FOURTH (or 25%) of South Koreas’ benchmark stock index weighting!! This stat helps in understanding the healthy liquidity and diversification of the US markets – the biggest weight in the S&P 500 is closer to 3.9% (Apple back in December).
Stat #4: The tech sector in the US accounts for over 26.8% of the S&P 500 – one of its biggest weightings ever since the Tech Bubble of 2000. Financials are second at about 17%.
Stat #5: Expectations for 2018 technology spending among CIOs (Chief Information Officers) were the highest of all 14 years of a Bernstein survey*.
Understand the concepts of diversification and “Sticking with a Plan” so techlash doesn’t have its day with your portfolio.
*Source: WSJ; “Warning Sign: Tech Stocks….” March 28,2018.
Thank you for reading and TGIF! Happy Easter!