Meanwhile, U.S. technology stocks and especially the FAANGs (Meta Platforms Inc. (a.k.a. Facebook), Apple Inc., Amazon.com Inc., Netflix Inc. and Google LLC’s parent Alphabet Inc.), are no doubt taking names and kicking butt, gaining more market share and rapidly growing sales as consumers continue to shift their spending habits online.
Their market shares also rose, and so have their valuations. For example, Apple became the first company to break the US$3-trillion valuation barrier, making it worth more than the entire Canadian stock market and over two times this country’s gross domestic product.
Then you have Tesla Inc., which gained more than US$140 billion in market capitalization after reporting market-beating production and delivery numbers during its fourth quarter. That one-day gain is worth more than the entire market cap of Volkswagen AG, according to financial reporter Holger Zschaepitz, and values each Tesla car being delivered at over one million dollars.
One has to wonder what kind of domestic and global impact this technological shift will have, and more so, where we go from here should this be a permanent step change? Keep in mind, one out of every 153 American workers is already an Amazon employee, according to Scott Galloway, an author and business professor.
Canada, though, has decided to take an entirely different approach: going all in on real estate speculation instead of getting in on this digital transformation. Perhaps this has been reinforced by past spectacular failures such as Nortel Networks Corp. and BlackBerry Ltd.
But real estate is a non-producing asset and sucks capital out of the economy that could be used to fund and create more growth companies such as Shopify Inc., or even transform our still-dominant traditional energy, banking and telecommunications sectors.
Any material change in interest rates or quantitative easing could send both sectors into correction mode, so perhaps there will be a second chance for Canada to get it right and realize the long-term economic benefits of having a highly adaptable and technologically driven economy, instead of one driven by one-time transactions such as real estate speculation.
This content was originally published here.