If you’re an investor, it can be helpful to remember that corporate leadership is rarely permanent. In fact, very few companies seem to stay in the global top 10 for more than a decade, and history shows how quickly the market’s favourites can change.[1]
For those of us who were around in the early 1980s (when Rubiks cubes and hypercolour T-shirts were all the rage) it was the big US companies that were holding the highest share market value – IBM, AT&T, Exxon, Standard Oil, General Electric … But in the late 1980s and into the 1990s (the days of dial-up internet and the CD Discman) the Japanese giants dominated the rankings – companies like Nippon T&T, Bank of Tokyo – Mitsubishi, Toyota and Fuji Bank.
Then from the late 1990’s and into the 2000’s (hello iPods, DVD box sets and Harry Potter mania) it changed again as technology, demographics and global capital shifted.
In the decades since, we’ve seen Smartphones, e-commerce, digital payment platforms and app-based shopping become mainstream, as well as cloud computing and now the introduction of AI.
… So there’s no surprise that tech giants (Apple, Microsoft, Nvidia, Alphabet and Amazon) are currently the largest public global companies by market cap. But if history tells us anything, even these giants are not guaranteed a permanent place at the top.
As a financial adviser, market shifts over time highlight a powerful lesson in humility when it comes to investing – That is, that today’s market leaders may seem unstoppable, but investing too much in too few companies (market leaders or otherwise) can be risky.
Just like fashion trends and the latest fads, market leaders, too, are destined to change.
Long term success in investing comes less from chasing current market leaders, and more from staying diversified, disciplined and prepared for change.
For financial advice that aligns your money with your values, call me at Align Financial on (02) 9913 9995.
[1] Research by Bridgewater Associates looking back over 120 years of equity-market leadership found that while some ‘market champions’ remain dominant for decades, the vast majority are eventually displaced. (Bridgewater Associates, The Life Cycle of Market Champions, published on 18 June 2024 by Bob Prince, Khia Kurtenbach & Thomas Maisonneuve.)
