Tech-tonic Shifts

Every day these notes are sent from Southern California where Atlas is headquartered, the land of seismic shocks.  Without notice (although there is this earthquake early warning system), the ground begins shaking as plates move against each other along the San Andreas Fault System.  Most tremors are not noteworthy, requiring no headline space and barely registering on the Richter scale.  But every once in a while, something significant happens, resulting in large capital losses making the event global news.

Losses in wealth follow a similar pattern.  Most of them are not worthy of news, tending to be relatively small in nature and recoverable given enough time.   Occasionally, however, losses large enough to make headlines begin mounting and the press jumps all over it.  Last year was one of those periods when the “Richer Scale” was triggered.

According to this article from CNBC, a world record occurred in 2022.  In fact, Guinness concurs, declaring Elon Musk’s loss historic.  He’s just the best at everything!  The once wealthiest man alive experienced a net worth loss of $182 billion.  Actually, there is some debate as to what the exact value of the loss was but suffice it to say it was a multiple of the previous record of $58.6 billion set in 2000 by a Japanese investor.

Another “Richer Scale” shakeup was experienced by the world’s premier smartphone maker.  According to this Reuters article, the once apple of the tech space’s eye managed a cumulative setback of over $1 trillion as of the first trading day of this year.  Interestingly, it reached the $3 trillion valuation mark a year earlier to the day.  This company wasn’t the only tech company to suffer major declines in the valuation of their stock.  Some pundits wonder if these once giants of the industry will ever find a tonic strong enough to help them resume their prior dominance in market indices. 

These weren’t the only two wealth-shaking events in 2022, crypto comes to mind.  Earthquakes don’t just happen by themselves.  They are typically accompanied by foreshocks and/or aftershocks.   Foreshocks aren’t distinguishable until after the mainshock has occurred.  Similarly, we don’t yet know if the “Richer Scale” events experienced in 2022 were part of the foreshock or the mainshock to the global economy during this business cycle.  Naturally, we are hoping for the latter.