Time To Pivot: S&P 500, Apple, Amazon, Facebook And Google

Summary

• For the ten years through to the end of 2021 the S&P 500 produced very difficult to beat and not likely repeatable returns.
• The index averaged 16.6% growth per annum while the economy as a whole, measured by GDP growth, only grew at less than 3% a year.
• Think about that for a second. If the economy only grows at 3% how can the value of the companies that make up the economy grow at almost 17%?
• The math simply doesn’t work. Where is the additional value coming from? How do we explain this phenomenon and what does it mean for the next decade?
• Are the S&P 500, Apple, Google, Facebook and Amazon good investments for the next decade or is it time to pivot in a different direction?

Take a leap into the future: time to pivot your investment approach

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Introduction

When the economy is growing at an average of less than 3%, as the chart above demonstrates, how can the businesses that make up the economy grow at 16.6% per annum over the period 2011 to 2021?

Consider that

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in AMZN over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.