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Tech booms versus emerging markets
When capitalism nearly died in 2008, major stock market indices experienced >50% drawdowns from all-time highs. After unprecedented interventions by the Federal Reserve plus a historic surge in government debt to GDP… Tech, growth, and the S&P 500 have seen stellar returns (QQQ, VUG, & SPY respectively above).
On the other hand — small caps (VB), value (VTV), real estate (VNQ), developed market (VEA), and emerging market (IEMG) ETFs have significantly underperformed. Tech companies have become more valuable than most countries’ GDP. Recently, the total market cap for top tech companies has surpassed $14T.
Will the tech boom continue upwards or is it time for small caps plus value to mean revert to a historically fair share of the total market? Tech also leads dominance for the U.S. versus other developed and emerging markets. More recently, the divergence is especially striking in percent returns and drawdown visualizations since 2020.
