It's interesting how people think that the big companies of today will be the big companies tomorrow, even though history has shown time and time again that even the biggest hitters can and do fall. I understand investing in them in the short-medium term, but putting all of your eggs in the current megacap basket and planning to hold for 30+ years?
For example:
In 2010 the biggest company by market cap was Exxon Mobil. If you had put your money into that at the time, you'd be sitting on 30% all-time returns, and by the 30 year mark I don't see that improving.
The biggest company in 2000 was GE, and if you invested in that at the time, you'd be down ~70%, and I don't see that turning around for you by the 30-year mark either.
The biggest company in 1990 was IBM, which, granted, would have gotten you a ~400% return by the 30-year mark, but you're still vastly underperforming the S&P.
You can take other examples, and I'm sure there are exceptions, but you get the idea.
So when newcomers show up here and everyone says “Apple to the MOON” and or people come around showing off their 30% Apple 40% MSFT 30% GOOG portfolios followed by the “hold forever” mantra…
My question is…. what's up with that?
I hope this doesn't sound too judgmental, I'm just looking to hear from all of these “hold forever” people, some of whom dump their money into these big tech companies without even thinking as though they can defy gravity. New investors in particular seem to have extremely tech-heavy portfolios (because those are the big companies of today) as though no other sectors even exist, and they lose their shit when you suggest that these companies might not be the giants they are today by the time a 20-year-old reaches retirement.
These companies perform amazingly when you discover them early enough, but by the time word gets around, which it most certainly has for companies like Apple by this point, they tend to stagnate or even decline. You're not exactly outsmarting anyone by investing in Apple. I get that they're rock solid companies by every indication right now, but why isn't there more hesitation here, and what makes people think that not just one, but several of these companies will defy the odds and continue to outperform though to 2055, which is what would need to happen to give the AAPL/MSFT/GOOG-style portfolio a “hold forever” advantage?
A bonus question that I'm very curious about: Which top-20ish companies do you think have peaked, or might already be in decline, or will peak in the very near future? Please share your contrarian opinions about the most-loved mega-cap stocks (no judgment if you're wrong or in the minority), or investing in mega-caps more generally.
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