What America’s Top 10 Companies Say about the Future

When I first started out in the markets, each morning I’d make a note of the closing prices of major indices, currencies, commodities and gold.

For example, gold rising $20 overnight usually reflected political turmoil. And if the S&P 500 rose 1.5%, chances are the Aussie market would follow suit.

But it was towards the end of last year that I added bitcoin to my morning ritual.

At first, not much happened. There were $10 rises here and there.

And then…boom.

This year has been incredible. Most mornings I’m writing down triple-figure-dollar changes. Just last night, the crypto rose another US$137 (AU$181), and is currently trading at US$8,256 (AU$10,937).

Bitcoin has seen a parabolic trajectory all year. Nothing appears to be slowing it down.

In honesty, I’m not sure I’ve ever seen anything like it. Chances are, no one has seen anything like it because no one has ever seen anything like bitcoin.

Bitcoin and other cryptocurrencies, in my view, are going to challenge the existing monetary system. It’s one thing for the bitcoin price to rise as it has. But it’s what makes cryptos tick that will truly revolutionise the markets.

Don’t believe me? Take a look at this chart of the top 10 companies in the US based on market capitalisation over the past century:

100 years of America's top 100 companies

Source: @jsblokland/The Daily Shot
[Click to enlarge]

The image clearly shows how much the US stock market has changed.

A hundred years ago, the biggest businesses in the US were involved in the steel and oil industries.

50 years later, in 1967, you start to see more diversity in terms of represented sectors. Oil firms are still there. But you also see consumer companies, telcos and tech firms, among others. It’s notable that the 10 largest companies in 1967 reflected an economy where things were being built, rather than consumed.

And then we come to today. The five biggest companies by market cap in the US are all tech firms, with three major banks rounding out the top 10. 

Invest in the technology boom

The natural inclination is to point out how unbalanced this is. Today we’ve got a US market driven by firms that either create money out of thin air or trade on the back the ‘Internet of Things’.

50 and 100 years ago, what made the economy hum was visible. You could see the proof of a productive economy. Whereas today it’s hidden behind enormous digital debt and flashy touchscreens.

However, this chart tells you something more important. And that’s where the investing opportunities are — in the things you can’t see.

Like bitcoin, for example. You can’t see bitcoin. And unlike gold, you can’t hug it, either. However, bitcoin is a vital future currency in my view.

But more important than bitcoin is the technology that drives it: the ‘blockchain’.

Without the blockchain, bitcoin — and any other crypto for that matter — doesn’t work.

Blockchain technology is becoming to our generation what the steam engine was to the industrial revolution.

Understanding the blockchain is simple. It is the process of moving one piece of information from one ‘block’ to another. Each block moves along the chain, maintaining all stored data. When new data comes along, it creates a new block and stores it. The block then closes. This process repeats whenever there is new data to add to the blockchain.

Basically, the blockchain is simply a collection of information that moves in real-time. You can’t alter or tweak it, making it extremely secure.

And this incredibly disruptive technology is, in my view, going to create an unseen number of investing opportunities for those that get in early.

Chances are, looking at the chart above, the firms at the top of the list today won’t be there in another 50 years’ time. New companies will come along to replace them. But what we do know for certain is that technology is going to be a key driver of economic change.

Kind regards,

Shae Russell,
Editor, Markets & Money

Shae Russell started out in financial markets more than a decade ago. Working with a derivative brokering firm, she helped clients understand derivative markets, as well as teaching them the basics of technical analysis. Since joining Port Phillip Publishing eight years ago, Shae has worked across a number of publications. She holds the record for the highest-returning stock recommendation, in which a microcap stock returned over 1,200% in six months. Ask her about it, and she won’t stop yapping on. For the past two years, Shae has worked alongside Jim Rickards as his Australian analyst, translating global macro trends for Aussie investors, and how they can take advantage of these trends. Drawing on her extensive experience, Shae is the lead editor of Markets & Money. Each day, Shae looks at broad macro trends developing around the world, combining them with her distaste for central banks and irrational love of all things bullion.

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