As the sell-off rocked the U.S. giants, is this the end of the easy money big tech companies?

With the US giants selling off, is this the end of easy money big tech, or will Metaverse’s man-made realm soon or forever be the place to make money?



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Will your Metaverse be a place to make money soon, or forever?

That’s the question investors have been asking this week, as the prospects for U.S. tech giants betting on this or any other form of life-changing innovation suddenly seem less bright.

For now, at least, Wall Street seems to be disenchanted with global “disruptive” tech ventures in Silicon Valley or Seattle. Over the past few days, traders have sold shares in Meta — the owner of Facebook, Instagram and WhatsApp, and a leading member of the movement that sees the Metaverse as “the foundation of the future.”

Brutal reality: Facebook owner's $69 billion bet on Metaverse angers investors

Brutal reality: Facebook owner’s $69 billion bet on Metaverse angers investors

Meta is under pressure for its $69 billion gamble in the virtual reality space and its ability to counter the threat to Instagram from the TikTok video app. As pointed out by Chris Ford, head of growth equities at Sanlam Investments, TikTok is not only the largest social media platform in the world, it is also owned by the Chinese.

As Ford has highlighted, the perception that the US is the only innovation hub worth supporting may be shifting.

At the beginning of the year, Meta’s market cap was close to $1 trillion. Now it’s down nearly $263 billion, and the result is that Meta’s boss and largest shareholder, Mark Zuckerberg, is less wealthy than ever.

The situation for many British investors has also gotten worse. They include not only investors in technology funds and trusts, but also investors with savings in some general funds.

Concerns about Meta’s strategy underscore a trend of declining profits for other tech giants.

Shares of Google parent Alphabet have fallen 35% this year. Apple shares have suffered less, but as this column reports, the iPhone maker is now considered more of a luxury business.

That may be a relief to those with money in the F&C trust, with Apple the third-largest holding company and Microsoft the largest. Microsoft shares, which have fallen 33% since January, are also owned by Fundsmith, another hugely popular fund. So should Wall Street’s new distaste for tech be a signal for British investors to end their ties to these American companies? Part of the reason tech stocks are booming is the rapidly changing environment of low interest rates and easy money.

Jason Hollands of Bestinvest is cautious.

“We’re in a very different environment. The days of easy quantitative easing boosted these stocks. “We’re not going back there any time soon. ”

If you have the means to do so, you might consider sitting back amidst the current economic and geopolitical turmoil, waiting for some easing, and agreeing with Ford that this week’s rout was an overreaction. He believes that while the tout of tech companies and their disruptive power in a pandemic may be overdone, the current pessimism is misplaced, given that the potential of artificial intelligence (Ai) is not fully appreciated.

AI will be a focus for Alphabet and Microsoft. They work on what Ford calls “the more prosaic parts of the metaverse,” such as using it as a means to share manufacturing designs, rather than as a place for avatars to socialize. If you have savings in tech funds, 90% of them are likely to be invested in the US, which means you may not have exposure to innovations incubated elsewhere. China may already be ahead of the US, but this is overshadowed by sanctions on its manufacturers.

These considerations should be a signal to anyone who wants to participate in innovation rewards to cast a wide net.

For example, Augmentum Trust invests in fintech companies that support the digital transformation of traditional banks.

The trust, which trades at a 41 per cent discount to its net asset value, is a bet on UK plc after the industry has been battered recently. As manager Tim Levene puts it, 17 of the 24 holdings are British businesses that could be worth $12 trillion in global markets within a few years.

I will continue to be an investor in F&C, Fundsmith and the Scottish Mortgage Trust, which holds a stake in TikTok owner ByteDance.

As much as I like to haggle, I’m not going to plug my nose and buy Meta on the advice of the AllianceBernstein brokerage, as it seems the spoilers are already broken.


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