"Wild Ride to Nowhere": APPL, MSFT, AMZN, GOOG, FB Soar to New High. Rest of Stock Market is a Dud..

[marmar]

“Wild Ride to Nowhere”: APPL, MSFT, AMZN, GOOG, FB Soar to New High. Rest of Stock Market is a Dud, Has Been for Years
by Wolf Richter • Jul 11, 2020 •

The market has come to totally depend on the “Giant 5.” A scary out-of-whack weight on the way down.
By Wolf Richter for WOLF STREET.


The “Giant 5” – Apple, Microsoft, Amazon, Alphabet, and Facebook – had another good day on Friday, with their combined market capitalization rising by 0.6% to another new high of $6.64 trillion, continuing a spike that started on March 16 and now measures 62.2%. In dollar terms, five stocks gained $2.54 trillion in less than four months.

Since January 1, 2017, my “Giant 5 Index” has soared by 184%, or by $4.3 trillion, with two sell-offs or crashes or whatever in between.

Even these days, when trillions fly by so fast that they’re hard to see, that’s still a huge increase in market value of just five companies in the span of three-and-a-half years (market cap data via YCharts):



The market capitalization – the number of shares outstanding times the current share price – of the Giant 5 has reached a breath-taking magnitude:

1. Apple [AAPL]: $1.66 trillion
2. Microsoft [MSFT]: $1.62 trillion
3. Amazon [AMZN]: $1.60 trillion
4. Alphabet [GOOG]: $1.05 trillion
5. Facebook [FB]: $628 billion.

How big are they compared to the entire stock market?

And I mean the entire US stock market, and not just the S&P 500. The Wilshire 5000 Total Market Index tracks all 3,415 or so US-listed companies. And the market cap of all those companies combined rose today to $32.47 trillion, up 44.4% from its crisis low on March 23. ............(more)

https://wolfstreet.com/2020/07/11/wild-ride-to-nowhere-appl-msft-amzn-goog-and-fb-soar-to-new-high-rest-of-the-stock-market-is-a-dud-has-been-for-years/

[RazzleCat]

1. The market is out of wack but this makes sense

With so many people social distancing, and offices using working from home companies that are internet/cloud based should go up in value.

[jimfields33]

2. Makes perfect sense

Those companies thrive when everyone is at home.

[progree]

3. Sneaking in another graph: the entire U.S. stock market minus those Giant 5:

"entire U.S. stock market" as represented by the Wilshire 5000



From January 1, 2017 to July 11, 2020 it went from 21.1 to 25.7, according to my eyeballs. That's a 21.8% increase over 3.524 years, which is an annualized return of 5.76%/year (1.0576^3.524 = 1.218) .

But from January 26, 2018 to July 11, 2020 (the last 2.46 years), it's actually a teeny bit down. Although both the foregoing is without dividends, as far as I can tell.

Edit: Ooops, it is through Friday July 10, 2020 close, not July 11 (Saturday).

Edit: another issue is he's using market cap rather than share price. Share buybacks reduce the number of shares and thus reduce the market cap (everything else being equal). So a shareholder in a company that did a buyback would see, over time, a larger percent increase in the share price than the percent increase in the market cap.