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Highlights
- Apple and other big tech stocks are the world’s most valuable companies, but competitors like Tesla are rising
- Retail investors can shift the trends in the markets just by a simple tap on the investment app on their smartphones
- A change in stance can slow down rally in tech stocks, and redistribute money to emerging stocks
Gone are the days when two-trillion-dollar market cap was beyond reach. After having breached the one-trillion dollar wall in 2018, Apple’s next feat was two-trillion dollar market cap in 2020.
Though the global economy is not doing well in the wake of the pandemic that has forced businesses to wind up, with governments and central banks rushing to add liquidity in the market, the global stock market is scripting history. Now the discussions revolve around three-trillion-dollar market cap. Even a volatile asset, the co-called cryptocurrency king – Bitcoin’s market value hovers in trillions of dollars.
Can big tech stocks further rally?
There are two elements to consider here.
One, the rally in tech stocks – which can be easily understood by noting that Apple breached $2 trillion in August 2020 and took just two years to double its market cap, and Microsoft dethroned Apple to become the world’s largest, though for a brief period – owes to the unanticipated contribution of retail investors, thanks to online zero-commission brokerages.
Had it not been these retail investors and online brokerages, cryptocurrencies could never have become so big. The point is there is too much liquidity in the market and everybody realizes the hegemony of big tech, and hence these bull runs in stocks.
Also read: The trick to save extra 20 dollars every week
Two, we have players like Tesla that are yet to expand footprint and enter new markets. These companies are listed, popular and will continue to attract institutional and retail investors. This could mean that even in a situation where the market is inundated with liquidity, money will be distributed, and in 2022, emerging sectors may find more patronage.
As far as interest rate hikes are concerned, the muted impact of the Fed's QE tapering indicates that stocks may be impacted only a little by Fed's policy decisions.
It is the redistribution of money in the market, from big tech stocks to emerging companies, which might slow down the pace of bull-run in tech stocks.
How have these emerging sectors fared?
The S&P/ TSX Renewable Energy and Clean Technology Index returns in 2021 were in negative. This is despite the fact that the benchmark index, S&P/ TSX Composite Index, churned double-digit returns in this year, and breached 20,000 it was the first time.
It may even be said that the clean technology stocks may be available at a discount.
Second, the world is talking about clean energy. The heat waves wreaked havoc in the US and Canada in the summers of 2021 and were enough for analysts to forecast a faster-than-expected shift to renewable energy. At every multi-lateral meet in 2021, including the COP26 Summit, global warming and extreme climate conditions was the focus.
Now that we know the global stock market has enough liquidity, 2022 may be the year when more than tech stocks, the clean energy stocks become a preferred option. Even in the event of no eye-popping bull-run in these emerging companies, these are likely an attractive bet for a longer-term horizon.
Also read: How to invest in cryptocurrencies?
Bottom line
Year 2022 may once again be the year of big tech companies leading in the list of most valuable assets. There is little possibility that emerging stocks including clean energy can dethrone tech giants. However, there may be a redistribution of investors’ money in 2022. Retail investors, who can change their positions in a stock with a tap on the smartphone, are likely to be the main drivers in the global stock market.
