Epic S&P 500 Rally Is Powered by Assets You Can’t See or Touch
- Intangible assets make up more than 84% of S&P 500 firm value
- Covid is pushing this share higher at the expense of workers
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Take all the physical assets owned by all the companies in the S&P 500, all the cars and office buildings and factories and merchandise, then sell them all at cost in one giant sale, and they would generate a net sum that doesn’t even come out to 20% of the index’s $28 trillion value. Much of what’s left comes from things you can’t see or count: algorithms and brands and lists.
This is, in the broadest sense, a new phenomenon. Back in 1985, for instance, before Silicon Valley came to dominate the ranks of America’s biggest companies, tangible assets tended to be closer to half the market’s value.