While changes in the composition of market sectors have been relatively stable over the past 20 years, periodically examining a list of the five largest companies in the world periodically shows the dramatic shift toward dominance of technology companies.
It is reasonable to expect the stock market valuations of the top companies to grow over time in keeping with the expanding global economy. However, the more recent concentration in technology is truly stunning. In 2001, the five largest companies came from five different sectors (industrials, technology, energy, finance and consumer staples). As recently as six years ago, energy companies accounted for 3 of the spots, (Apple and Industrial Commercial Bank of China rounding out the top spots) and only two of the top five were U.S. based companies. Today, the five most valuable companies in the world are all U.S. based technology companies. The whiz kids from Silicon Valley have not only built a better mousetrap, it appears they will inherit the earth. However, if one thing is certain, it is change. Five years from now, expect the top five companies to have changed again.