83% of S&P market value in 1975 was tangible and now only 13% is? (transaction, percentage)

[lovecrowds]

The Intangible S&P 500 ...Our Politicians Can't Handle The Truth - Howard Lindzon

I think it is amazing how intangible the economy is. How of much of it is based on services as opposed to goods.

Interesting, thing is that other then health care that most of these "services" it is easy to go without.

Goods though are different thing as basically all the population has to have solid goods like agriculture, metals, wood and petroleum based products.

I find very interesting for instance that Facebook has 10 times the market value of Kroger or that Microsoft has twice the market cap of Walmart.

[Hesky]

So I suppose its better to go back to the 18th century, no?

This is the result of the United States transitioning from a manufacturing economy to a service economy. Add to that technological advances.

[lieqiang]

Despite what you hear from the "bring back our factory jobs" crowd a service based economy isn't in itself a bad thing.

If you look at a list of countries by GDP sector the ones with highest percentage service based are generally wealthier developed countries with a relatively high standard of living, with notable exception of a few Caribbean countries with outsized financial sectors. Sorting by countries with higher percentage industrial you get mostly poorer countries with a lower standard of living, again with exception of some wealthy middle eastern oil states and a few others like South Korea.

Walmart sells tangible things but it comes down mostly to workers doing basic things and providing simple services. Put on shelf. Drive truck to store. Exchange money with customer. Etc. The fact that physical goods are changing hands in transactions doesn't mean they should be valued higher than an entity like Google.

[Mircea]

Originally Posted by lovecrowds

The Intangible S&P 500 ...Our Politicians Can't Handle The Truth - Howard Lindzon

I think it is amazing how intangible the economy is. How of much of it is based on services as opposed to goods.

Interesting, thing is that other then health care that most of these "services" it is easy to go without.

Goods though are different thing as basically all the population has to have solid goods like agriculture, metals, wood and petroleum based products.

I find very interesting for instance that Facebook has 10 times the market value of Kroger or that Microsoft has twice the market cap of Walmart.

That buttresses the fact that you're in an advanced 4th Level Economy and no one really knows what's supposed to happen.

[Pub-911]

What does the term "supposed to happen" even mean?

[Troyfan]

I don't know how to value these new companies either. The goodwill comes from paying more for an acquisition than it's book value. Intellectual property, patents, trademarks, etc. are booked at cost, I guess. I wonder how many of these assets translate into earnings power. Many of these companies don't pay dividends, saying the earnings have to reinvested in the business. If so, they're not really earnings and the earning power of the company's assets is not what it appears to be.

[slapshotbob99]

My portfolio is a balance of tech giants and manufacturing/food companies. You need to invest in some companies that will "own" a piece of the future. Stay away from retail and service sector long term. Those don't actually control anything of their own. Amazon, etc. will eventually eat their lunch.

[slapshotbob99]

In theory, we will one day move to a "UBI" (Universal Basic Income) system. Basically welfare-for-all. Because of automation and outsourcing, the majority of the American population will be unemployed. Only a few percent of people will need to design and maintain the machines. Most physical labor and driving jobs will be phased out in one generation from now. But our economic system isn't ready for that jump yet. If you jack up taxes fast enough to support that, people will freak out. I don't know how we peacefully make that transition.

[Pub-911]

People have a terrible record when attempting to divine the future. The best bet is simply to pay attention and remain flexible.

[andywire]

You don't win wars with burgers and fries. You win wars with weapons of war. These are manufactured in factories, not McDonalds. This is where "service sector economies" fall short. I would take it a step further and suggest "service sector economies" are flawed and doomed to fail.