Big Tech is dragging the broad market higher, Mike Larson shares three ways to exploit this, in and out of Big tech.

Big Oil had its era; so did Big Steel, but these days it’s a Big Tech world and we’re all just living in it.

That’s true in our daily lives, with more Americans than ever before working from home rather than an office and ordering stuff online rather than heading to the mall. And it’s true in the stock market as well.

How so? Get a load of this data highlighted in a recent Wall Street Journal story:

  • The top 10 largest companies in the S&P 500 just topped $8 trillion in market value. That’s greater than the individual market capitalization of all the largest, non-U.S. major stock exchanges, including those in Japan, China, Europe and the UK.
  • We’re only talking about 10 stocks here – so few you can count them using your two hands. But those 10 names now represent 29% of the S&P 500. That’s up six percentage points from 2019 – and the most top heavy the benchmark index has been in at least four decades.
  • The first six names on the Top 10 list are all Big Tech firms, including Apple (AAPL), Microsoft (MSFT), and Amazon (AMZN).

Most of them are quasi-monopolies, so they’re reporting strong earnings in this Covid-19 world. They’re also getting even more (unneeded) help from the Federal Reserve to borrow money on the cheap.

As a result, their shares are crushing it. The tech-centric Nasdaq Composite was recently showing year-to-date gains of 22%. And because the S&P 500 is now so tech-heavy, it’s doing fairly well, too – up 4% YTD.

But once you strip out the impact of mega-cap tech stocks, you get a much more subdued picture. The Dow Transports, for instance, were recently down slightly on the year. And the much broader Russell 2000 index of smaller-capitalization companies was down roughly 5%.

Now do you see why I say it’s a Big Tech world and we’re just living in it? That has clear implications for investors – and as long as it’s the case, I see three ways to profit:

  • First, if you’re the kind of investor or trader who is comfortable riding powerful trends in the short term, but cognizant that they won’t last forever, invest in attractive, dominant tech names.
  • Second, as great as tech stocks have been, there are other investments spinning off solid, respectable gains. They also address the tech sector’s biggest flaw: A general lack of big dividends/income.
  • Third, don’t forget about the select handful of stocks that are actually outperforming tech – precious metals mining shares. Gold and silver miners don’t get anywhere near the press of Big Tech stocks because they represent a much smaller portion of the S&P 500.

But even if many others aren’t paying attention, I certainly am and you should, too! The metals recommendations I’ve made in the last several quarters have performed phenomenally. When you’re fortunate enough to get a correction like we did in the last few days, make sure you take advantage of it to add exposure on the cheap.

In short, this is the kind of market where you can 1) Profit from Big Tech 2) Profit from stocks that give you the one big thing Big Tech doesn’t and 3) Profit from stocks that are (quietly) beating Big Tech. I recommend you take that playbook and run with it!

My Safe Money Report focuses on these kinds of stocks, which include names in the consumer staples, food and beverage, retail, and health care sectors. Subscribe to Safe Money Report here…