I don’t know why, but some people have recently asked me for my opinion on tech headed into the new year.
I guess it’s gratifying that at least a handful of people seem to think that my outlook on tech stocks actually matters, but that is hardly my area of expertise. That is, if what you’re looking for is some kind of stock-specific recommendation, I’m really not the guy.
I’ve owned every Mac going back to the Classic; if I actually shopped, I imagine I’d be hooked on Amazon; I like Netflix because the Apple TV app is easy to use; I don’t care one way or another about Microsoft but I do like Excel; the only thing I know about Alibaba is that Jack Ma is right about globalization; I know the fate of Hong Kong equities ebbs and flows with Tencent; and Facebook banned my Heisenberg Report page because I couldn’t prove I’m actually Walter White.
So there’s my company-by-company breakdown. I hope that was helpful.
Humor aside, while I can’t offer you much in the way of company-specific analysis, what I can offer you is a pretty nuanced take on the space as a whole – how it behaves, volatility, the group’s role in leading the rally, the extent to which it’s become synonymous with factors that are used in smart beta products, why the much ballyhooed “rotation” that started on November 29 matters, and how these names are the poster children for Howard Marks’ “perpetual motion machine.” Frankly, I think all of that is a lot more important than any single-stock analysis of these behemoths.
Let me say to start that I don’t entirely agree with everything Howard Marks said earlier this year in his critique of tech. Take this passage from his widely-read note for instance:
The FAANGs are truly great companies, growing rapidly and trouncing the competition (where it exists). But some are doing so without much profitability, and for others profits are growing slower than revenues. Some of them doubtless will be the great companies of tomorrow. But will they all? Are they…