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Big questions to chew on

What a way to begin the new year, with strong market gains all round and the FTSE 100 passing the 7500 mark for the first time since the pandemic. Notable and encouraging as that start was, there’s a lot of catching up to do. Apple’s share price has risen almost 150 per cent since the start of 2020, and the tech star has now become the first company to reach a market value of $3tn (£2.2tn). It’s a huge success for chief executive Tim Cook, but what does the event tell us about the way ahead for stock markets?

Is Apple’s $3tn value proof that some sectors are in bubble territory, with believer-investors disregarding the risks from inflation, supply chain problems and regulators on the prowl? It faces stiff competition in certain areas: as noted by AJ Bell, Apple is locked in a “fierce fight for customer wallets in entertainment, where Netflix, Amazon, Disney and others are driving up the cost of acquired content and spending heavily on developing their own programming for good measure”. 

But many analysts remain bullish on Apple’s prospects. If you look at the numbers, it’s easy to glide over the risks. It’s got 745m subscribers to its high-margin services alone, and made $365bn in sales in the year to September 2021 – an annual gain of 33 per cent. And it’s moving into exciting new markets (cars and virtual reality among them). Whatever the risks posed to hyper-growth company valuations as we move from living with a pandemic to living with inflation, and as markets are weaned off years of artificial stimulus, quality tech stocks generating piles of cash will continue to have a place in portfolios. 

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