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The Fastest Rising Asset Classes in 2023
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Many corners of the market have shown resilience despite persistent inflation and slowing economic growth in 2023. U.S. equities, international equities, and a variety of bonds have seen positive returns so far this year.
In the above graphic, we rank the top-performing asset classes to date with data from BlackRock.
Asset Class Performance, Ranked
Here’s how select asset classes have performed in 2023 as of May 31:
Asset Type
2023 Return (as of May 31)
10-Year Annualized Return
U.S. Equities
9.8%
11.9%
Europe Equities
9.0%
5.3%
Japan Equities
8.8%
5.3%
Investment Grade Credit
2.8%
1.6%
High Yield Bonds
2.6%
3.0%
Cash
1.9%
0.9%
Emerging Market Debt
1.8%
1.9%
Emerging Market Equities
1.2%
2.3%
Developing Market Gov. Debt
0.9%
-0.5%
Infrastructure
0.8%
6.1%
REITs
-0.6%
4.3%
Commodities
-6.7%
0.0%
China Equities
-9.0%
2.1%
After a troublesome 2022 for markets, you can see above that U.S. equities have rebounded the fastest in 2023. They are sitting at 9.8% returns year-to-date.
However, this has largely been a story of a few outperformers buoying the overall market. Nvidia with 159% returns, along with Meta (120%), Apple (36%), and Microsoft (37%) are among the companies with strong growth. Many of these companies are investing billions in artificial (Read more...)
Chipmaker Nvidia is now worth nearly as much as Amazon.
America’s largest semiconductor company has vaulted past the $1 trillion market capitalization mark, a milestone reached by just a handful of companies including Apple, Amazon, and Microsoft. While many of these are household names, Nvidia has only recently gained widespread attention amid the AI boom.
The above graphic compares Nvidia to the seven companies that have reached the trillion dollar club.
Riding the AI Wave
Nvidia’s market cap has more than doubled in 2023 to over $1 trillion.
The company designs semiconductor chips that are made of silicon slices that contain specific patterns. Just like you flip an electrical switch by turning on a light at home, these chips have billions of switches that process complex information simultaneously.
Today, they are integral to many AI functions—from OpenAI’s ChatGPT to image generation. Here’s how Nvidia stands up against companies that have achieved the trillion dollar milestone:
Joined Club
Market Cap in trillions
Peak Market Cap in trillions
Apple
Aug 2018
$2.78
$2.94
Microsoft
Apr 2019
$2.47
$2.58
Aramco
Dec 2019
$2.06
$2.45
Alphabet
Jul 2020
$1.58
$1.98
Amazon
Apr 2020
$1.25
$1.88
Meta
Jun 2021
$0.68
$1.07
Tesla
Oct 2021
$0.63
$1.23
Nvidia
May 2023
$1.02
$1.02
Note: Market caps as of May 30th, 2023
After posting record sales, the company added $184 billion to its market value in one day. Only two other companies have exceeded this number: Amazon ($191 billion), and (Read more...)
Who Made the Most U.S. Unicorn Acquisitions Since 1997?
The elusive unicorn is no longer a myth in the U.S. startup world, with over a thousand private startups reaching a $1 billion valuation in the last 25 years.
While some of these startups eventually go public and go on to become household names, it’s also common for founders to exit through mergers and acquisitions (M&A), by selling their startup to another organization. In fact, over half of the 1,110 unicorns in the U.S. have made some sort of an exit—either through an IPO, a direct listing, a SPAC or an acquisition—since 1997.
Ilya Strebulaev, professor of finance and private equity at the Stanford Graduate School of Business, brings us this visualization featuring the companies that acquired the most unicorns over the last 25 years.
Strebulaev’s database lists 137 private and public companies along with PE firms who’ve acquired at least one unicorn since 1997, totaling 177 acquisitions.
The Biggest U.S. Unicorn Acquirers
In total, 27 companies have acquired two or more unicorns, accounting for nearly 38% of all acquisitions. 110 companies have acquired just one unicorn.
Who Made the Most U.S. Unicorn Acquisitions Since 1997?
The elusive unicorn is no longer a myth in the U.S. startup world, with over a thousand private startups reaching a $1 billion valuation in the last 25 years.
While some of these startups eventually go public and go on to become household names, it’s also common for founders to exit through mergers and acquisitions (M&A), by selling their startup to another organization. In fact, over half of the 1,110 unicorns in the U.S. have made some sort of an exit—either through an IPO, a direct listing, a SPAC or an acquisition—since 1997.
Ilya Strebulaev, professor of finance and private equity at the Stanford Graduate School of Business, brings us this visualization featuring the companies that acquired the most unicorns over the last 25 years.
Strebulaev’s database lists 137 private and public companies along with PE firms who’ve acquired at least one unicorn since 1997, totaling 177 acquisitions.
The Biggest U.S. Unicorn Acquirers
In total, 27 companies have acquired two or more unicorns, accounting for nearly 38% of all acquisitions. 110 companies have acquired just one unicorn.
Ever since Elon Musk took over Twitter and turned it into a tawdry reality show in which he is the star, the villain, and the comedian, everyone has been talking about a new decentralized web. New products, such as Mastodon, and new technologies, such as Activity Pub, are part of a new desire to build a new “fedeverse.” This is utopian thinking about taking the web back from the centralized web platforms.
One of my favorite bloggers, designer Lars Mensel notes:
We all feed social networks and online platforms with unprecedented amounts of data, hardly accounting for the fact everything might vanish when the ownership of a network changes (as seems likely with Twitter’s ongoing nosedive) or the business model collapses.
Mensel is right. And it makes sense that more of us should be doing it, but we don’t because, in the end, we want an easy way out. Manuel Moreale, a programmer points out:
The more I think and read about it, the more I’m convinced that there’s no solution to the centralisation issue we’re currently facing. And that’s because I think that fundamentally people are, when it comes to the internet, lazy. And gathering where everyone else is definitely seems easier. It’s also easier to delegate the job of moderating and policing to someone else and so as a result people will inevitably cluster around a few big websites, no matter what infrastructure we build. And sure, there is always going to be an independent minority (Read more...)
The Largest Public Companies by Market Cap (2000–2022)
The 10 largest public companies in the world had a combined market capitalization of nearly $12 trillion as of July 2022.
But two decades ago, the players that made up the list of the largest companies by market capitalization were radically different—and as the years ticked by, emerging megatrends and market sentiment have worked to shuffle the deck multiple times.
This racing bar chart by Truman Du shows how the ranking of the top 10 largest public companies has changed from 2000 to 2022.
Market Cap vs. Market Value
Before diving in, it’s worth noting that market capitalization is just one of many metrics that can be used to help value a company.
Simply put, a company’s market cap measures the combined price of a company’s outstanding shares—in other words, it’s the price someone would pay if they wanted to purchase the company outright at current stock prices (theoretically speaking).
But while a market cap provides insight into what equity is worth at a given time, calculating the market value is far more complicated and nuanced. After all, a price paid might not reflect the actual value of a business. To get a measure of value, other metrics like a company’s price-to-sales (P/S) ratio, price-to-earnings (P/E) ratio, or return-on-equity (ROE) may be considered.
The Largest Public Companies by Market Cap (2000–2022)
Over the last two decades, investor sentiment has shifted as different trends have played out, and the types of companies buoyed up by the market have changed as well.
For instance, tech and telecom companies were big in the very early 2000s, as investors got excited about the seemingly endless potential of the newly-introduced World Wide Web.
Largest Companies by Market Cap (January 1, 2000)
Rank
Company
Market Cap (Jan 1, 2000)
#1
Microsoft
$606 billion
#2
General Electric
$508 billion
#3
NTT Docomo
$367 billion
#4
Cisco
$352 billion
#5
Walmart
$302 billion
#6
Intel
$280 billion
#7
Nippon Telegraph
$271 billion
#8
Nokia
$219 billion
#9
Pfizer
$206 billion
#10
Deutsche Telekom
$197 billion
In the middle of the Dotcom bubble, investors were pouring money into internet-related tech startups. As PC and internet adoption picked up, investors hoped to “get in early” before these companies started to really turn a profit. This overzealous sentiment is reflected in the market capitalizations of public companies at the time, especially in the tech or telecom companies that were seen as benefitting from the internet boom.
Of course, the Dotcom bubble was not meant to last, and by January 2004 the top 10 list was looking much more diverse. At this time, Microsoft had lost the top spot to General Electric, which had a market cap of $309 billion. Then in the late 2000s, energy companies such as ExxonMobil, PetroChina, Gazprom, and BP took over the list as oil prices spiked well over $100 per barrel.
But fast forward to 2022, and we’ve come full circle, with Big Tech back in the limelight again.
Largest Companies by Market Cap (July 1, 2022)
Rank
Company
Market Cap (Jul 1, 2022)
#1
Saudi Aramco
$2.27 trillion
#2
Apple
$2.25 trillion
#3
Microsoft
$1.94 trillion
#4
Alphabet
$1.43 trillion
#5
Amazon
$1.11 trillion
#6
Tesla
$707 billion
#7
Berkshire Hathaway
$612 billion
#8
United Health Group
$485 billion
#9
Johnson & Johnson
$472 billion
#10
Tencent
$435 billion
Four of the five largest companies are in tech, and Tencent also cracks the list. Meanwhile, Tesla is classified as an automotive company, but it is thought of as an “internet of cars” company by many investors.
Big Picture Trends in the Top 10 by Market Cap List
Year
Description
Top Company (Market Cap USD)
Top 10 Description
2000
Dotcom Bubble
Microsoft ($606B)
Multiple tech/telecom companies in the mix
2004
Post-Bubble
GE ($309B)
Diverse mix of companies by industry
2009
Financial Crisis
PetroChina ($367B)
Six non-U.S. companies make the list
2014
$100 Oil
Apple ($560B)
Last year of oil-dominated list; tech starts ascending
2022
Big Tech Era
Aramco ($2,270B)*
Tech accounts for 80% of Top 5 companies
*As of July 1, 2022. Since then, Saudi Aramco has been re-surpassed by Apple due to a reversal in oil prices.
Trending Downwards?
Amidst rising interest rates, crippling inflation, and political issues like the ongoing conflict in Ukraine, signs point towards a potential global recession. Tech companies fared well during the COVID-19 pandemic, but will likely not be immune to the impacts of a generalized economic slowdown.
It’ll be interesting to see how things pan out in 2023, and which companies (if any) will manage to stay on top throughout the turmoil.
In the media and public discourse, companies like Alphabet, Apple, and Microsoft are often lumped together into the same “Big Tech” category. After all, they constitute the world’s largest companies by market capitalization.
And because of this, it’s easy to assume they’re in direct competition with each other, fiercely battling for a bigger piece of the “Big Tech” pie. But while there is certainly competition between the world’s tech giants, it’s a lot less drastic than you might imagine.
This is apparent when you look into their various revenue streams, and this series of graphics by Truman Du provides a revenue breakdown of Alphabet, Amazon, Apple, and Microsoft.
How Big Tech Companies Generate Revenue
So how does each big tech firm make money? Let’s explore using data from each company’s June 2022 quarterly income statements.
In Q2 2022, about 72% of Alphabet’s revenue came from search advertising. This makes sense considering Google and YouTube get a lot of eyeballs. Google dominates the search market—about 90% of all internet searches are done on Google platforms.
Perhaps unsurprisingly, Amazon’s biggest revenue driver is e-commerce. However, as the graphic above shows, the costs of e-commerce are so steep, that it actually reported a net loss in Q2 2022.
As it often is, Amazon Web Services (AWS) was the company’s main profit-earner this quarter.
I recently read a story about an airline worker being arrested for stealing thousands of dollars worth of goods from luggage at the airport. He got nabbed, thanks to Apple’s low-key tracker devices, AirTags. The very same AirTags have been the subject of stories (and inquiries) into “stalking” cases and other similar heinous maleficence. Of course, we have all found lost items and tracked our luggage across the planet to finally show up at our homes.
Henry Harteveldt, an online and travel industry analyst at Atmosphere Research, said he would use an AirTag if he had no choice other than to check a suitcase. “The end result is knowledge, and knowledge can increase peace of mind,” he says, adding: “2022 is not a year where you want to take chances with your checked bags no matter where you are traveling.”
AirTags, like every other recently introduced technology, only reinforces that no matter what, people with bad intentions will find ways to manipulate technology to their ends. This battle to prevent them from winning depends on the creators of those technologies and, to some extent, on all of us.
Not everyone is up with the idea of being part of the solution. “AirTags put the responsibility of keeping track of checked bags back on the customer; yet another obligation, along with online check-in 24 hours before a flight, that comes with the modern hellscape that is air travel,” writes Brad Stone, editor of (Read more...)
Building Balanced Exposure to the Blockchain Economy
Blockchain technology extends far beyond Bitcoin, Dogecoin, and other popular cryptocurrencies, as it provides a foundation for verifiable financial systems and proof of ownership for digital goods and assets.
From privacy concerns to anti-trust issues, big tech has eaten away at the world’s trust in the technology sector. As people search for better and more trustless solutions for their financial services, the blockchain economy is flourishing to meet their needs.
This infographic from MSCI outlines how quickly decentralized solutions and services have grown, and how investors can be a part of this exciting new sector.
The Three Key Trends of Blockchain Adoption
By cutting out the need for a centralized middleman that facilitates transactions, blockchains can provide more efficient systems to power three key trends of the fintech future:
Digital hard money and assets
Decentralized finance (DeFi)
Digital goods and collectibles
As the first cryptocurrency and deflationary monetary asset, Bitcoin is the ambassador for digital hard money. By having a fixed supply of 21 million bitcoin set in code and a decentralized network powering transactions on the network, Bitcoin provides anyone access to a deflationary digital asset that they can transfer in minutes without having to trust centralized intermediaries.
While Bitcoin pioneered the blockchain revolution over the past decade, further functionality built on blockchain technology is enabling digital goods and collectibles with non-fungible tokens (NFTs) along with more equitable and trustless financial systems through decentralized finance.
Amazon’s shipping and fulfillment costs have soared to over $150 billion
Global supply chain constraints have accelerated these costs, which are now 40x their 2009 levels
Visualizing Amazon’s Rising Shipping Costs
Most investors would agree that Amazon has been a winner during the COVID-19 pandemic. After all, in two short years from 2019 to 2021, sales soared to $469 billion from $280 billion and their market cap surged towards a $1.7 trillion valuation.
But even the best of companies have had to navigate choppy waters and uncertainty during this time. For Amazon, this has come in the form of cost pressures in their shipping and fulfillment department, which are now representing an increasingly large share of revenues.
Just how large are Amazon’s shipping and fulfillment costs becoming?
In 2021, shipping and fulfillment costs added up to $151.8 billion. Shipping, which includes sortation, delivery centers, and transportation costs amounted to $76.7 billion. Fulfillment costs, which include cost of operating and staff fulfillment centers, were $75.1 billion.
As a result of these trends, Amazon’s shipping and fulfillment expenses now represent 32% of their revenues:
Year
Cost as a % of revenue
2021
32%
2020
31%
2019
28%
2018
27%
2017
26%
2016
25%
2015
23%
2014
22%
2013
20%
2012
19%
2011
18%
As you can see, costs are escalating, and today’s figure is almost twice that of the 18% figure seen in 2011.
Amazon Web Services to the Rescue
While these expenses are rising, it’s important to remember (Read more...)
Microsoft
NTT Docomo
Nokia
Deutsche Telekom
Saudi Aramco
Tencent
