The Best Days for Mega Cap Tech are Over
Mega cap tech stocks have dominated the market over the last decade and ushered in an era of multi trillion-dollar market capitalizations, while winning over the steadfast loyalty of a generation of investors. Buying and holding these companies over the long haul has made careers and minted millionaires. Importantly, maintaining exposure has been critical to having any chance of outperforming the large cap indices of that period. However, those that have been in the markets long enough to remember how prior cycles ended will appreciate the dangers of extrapolating success in perpetuity. All good things eventually come to an end, and we think given the massive weights in the benchmarks, mega cap tech market dominance is over. These are great businesses with unassailable moats in many cases, but that does not mean that the stocks will outperform in the years ahead. We expect different market segments to emerge as new leadership going forward.
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