Apple vs Amazon in 2022: Why It Is So Important To Stay Passively Invested

What do you want to own in 2022? Apple or Amazon?

Both Apple and Amazon are huge multi-trillion dollar companies. The giants seem to grow bigger and bigger by the quarter and mint incredible profits - even when they don't want to.

Although both Apple and Amazon represent very different businesses and are also run very differently, they are both iconic examples of American corporate dynamism and the power of technology to scale your business and brand to unbelievable heights.

There are plenty of very real criticisms of both companies and it is actually an interesting exercise to think about "what could go wrong" with either business model.

It is beyond a cliche but one of the biggest truisms of the American economy is that there is A LOT of churn. The biggest and "best" companies defined nearly any way are rarely the biggest or best from decade to decade.

There are actually quite a few criticisms of both businesses and we would be happy to get into them but our purpose today is not to critique or even praise the companies but rather underline that even these stock market behemoths can still

Here is the chart from Apple and Amazon and the S&P 500 over the last year:

Quite a disparity.

Apple went from being a $2 to $3 trillion dollar company and Amazon basically stayed a $1.6 trillion dollar company.

That is quite a divergence and, we hope, neatly underlines why it is critical to own either the entire index or nearly the entire index.

Here is the same chart but looking at the share prices since 2020:

In 2020 Amazon outperformed Apple for most of the year.

Amazon had a monster 2020. Apple had a monster 2020 AND 2021. It was exceedingly difficult to predict those results. If you didn't see this coming, you are not alone.

As we look forward to 2022, it remains difficult to predict what will happen with these systemically important companies but it seems unlikely that most people should try and pick which of even these incredible enterprises will do well.

Now, if you have a problem with Apple or Amazon then your situation might be quite different.

If you dislike how Amazon operates vis a vis unions or its anti competitive prices or how Apple treats its labor force in China or those who develop Apps for its App Store (like intrepid fintech companies!!!) then you might want to exclude it.

The S&P 500 without Apple and Amazon still returned a very healthy return last year. If you had just bought Apple or Amazon (or even both!) then you it would have been a coin flip as to whether you would outperform or drastically underperform.

You might have thought you were buying one of the best companies out there and one that would be well placed to dominate the second year of the pandemic and you would have been right but the stock market would not reward you.

Or you could have been fearful that consumer demand for expensive electronics would be hit by another year of a challenging economy and limited opportunity for normal life. You would have been wrong!

This is why we built our company to keep you safely invested and help you invest along your passions, not trying to beat the market. We do not think you should try to beat the market because even the best and the brightest who spend all day, every day, struggle to accomplish that with any sort of regularity.

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