Bag, big is good: Apple is as good as the UK

The international indexes reward Wall Street and the US market advances, thanks also to the decline in China. On the other hand, there are few big giants that move indexes better than managers. And so the S&P closes up 27%, but 90 stocks are down 20% from their highs. Here because

INDICES BETTER THAN MANAGERS, 90 US STOCKS DOWN 20%

Will the Apple be able to overcome the reign of Her British Majesty? The challenge of the financial markets at the end of 2021 can also be described in this way. Apple, in fact, arrives at the end of New Year's Eve just a whisker away from yet another historic milestone: 2.999,600 billion dollars in value, as much as operators estimate it could be worth the house of the iPhone which, alone, is now worth almost as much on the stock market as the gross domestic product of the United Kingdom, equal to 3.212,000 billion dollars. Of course, it is unorthodox to compare the fate of nearly 70 million loyal subjects of the Queen with a profit machine that doesn't have to worry about pensions, health care, defense or other state spending items. But other comparisons are no less impressive. The Californian giant is worth, at current prices, five times as much as the entire Stock Exchange. And it is no exaggeration to say that Luca Maestri, the financial director of Apple who is undoubtedly the Luiss student who has made the most career, enjoys a higher prestige than the Treasury minister of the Bel Paese.

But enough with the paradoxes, however useful to underline that Leonardo DelVecchio, patron of Luxottica, is not far from the truth when, to justify his takeover of Generali, he underlines that small is not beautiful these days. Without wanting to go into the merits of his analysis, it can be said that in 2021, the second year of the pandemic, le Bags have rewarded the giants. In different ways:

Bags wear more and more stars and stripes clothes. This is what emerges from the photograph of the MSCI ACWI index which brings together a total of approximately 3.000 shares of companies listed on 23 developed markets and 26 emerging markets belonging to 11 different sectors. About 85% of the total of each market is represented in it for a total of 70,30 trillion dollars in assets. Five years ago, US stocks overtook them, to the point of representing 52% of the total capitalisation. Today the percentage has risen to an abundant 60%. In second place, separated by light years, is Japan with 5,72% of the value.
The US advance was favored by descent of Chinese tech giants, from Alibaba to Tencent, affected by their desire for autonomy, by Xi Jingping's ax. The result is that only one non-US title appears in the top ten by value today: it is TSMC, the giant of Taiwanese chips. For the rest, the ranking is made up of: Apple, Microsoft, Amazon, Meta (formerly Facebook), Alphaber (formerly Google), Tesla, Nvidia.
In tenth place, almost surprisingly, the first non-technological title popped up: JP Morgan with a market value of $474 billion. About a quarter of capitalization (23%) is in fact headed by the tech world, ahead of financials (15%). Make a the pharma sector made a great leap forward, about 13% of the capitalisation.
The leading stock in old Europe is the luxury giant LVMH with a market value of 369,33 billion for a price-to-earnings ratio of almost 40 times, a multiple worthy of the new economy.
But to what extent are the indices representative of the reality of the lists? Research published this morning by the Wall Street Journal shows that 85% of managers will end the year with a lower result to the performance of the indices. It is not an unusual phenomenon (in 2020 the figure was 64%) but this year has been particularly striking. Geopolitical tensions and the pandemic have strongly conditioned the performance of the price lists. In particular, during the year the optimism induced by the injections of money by the States to limit the impact of the closures crumbled. The euphoria of the various Robinhooders has given way to disappointment and a sort of fear: today, according to the Financial Times, a significant portion of put options (downside protection) is subscribed by individual savers.
Despite the S&P index starting to end the year with a 27% increase, more than 200 companies are 10% down on their highs, 90 lose about 20%. In the words of Alessandro Fugnoli, "this emptying has left the glittering facade of the indices at historic highs almost intact, but has eroded the value of the vast majority of stocks and in particular of the more speculative ones".
Hard not to share manager's morals (a graduate in philosophy, after all): “In this context, investors need even more than usual to maintain a balance of judgement. Just as the enthusiasm at the beginning of the year was exaggerated, so now the pessimism caused more by a sense of daze, disappointment and frustration than by a structural deterioration of the underlying picture seems excessive”.