Weekend Reading – Pros and cons of owning Big Tech

Weekend Reading – Pros and cons of owning Big Tech

Hey Readers,

Welcome to a new Weekend Reading edition, highlighting the pros and cons of owning Big Tech stocks.

Before that take, a few recent reads as reminders:

I questionned a well-known U.S. financial expert when he claimed you should own stocks for the long-run at your peril:

Weekend Reading – Stocks for the long run at your peril?

…and, while our annual projected dividend income is no longer growing by leaps and bounds, largely by design, it is inching higher over time which I reported here:

March 2024 Dividend Income Update

Weekend Reading – Pros and cons of owning Big Tech

Every quarter, seems analysts are salivating: there’s always more to come with Big Tech earnings. In recent years, the largest tech stocks have certainly delivered for those that have owned them – the evidence is in the market weighted S&P 500 index.

The top tech companies now — Apple, Amazon, Nvidia, Microsoft and Alphabet — among a few others combine to make up 30% of the S&P 500’s value, giving them an outsized impact on investors’ portfolios.

That can be good.

Weekend Reading - Pros and cons of owning Big Tech

Source: iShares IVV

Weekend Reading - Pros and cons of owning Big Tech - NY Times

Source: NY Times.

With historical, thriving returns, this tech dominance in the S&P 500 index means analysts and investors who invest in the S&P 500 are watching big tech earnings increasingly, every quarter, for prognostications about where the market is headed next…

Recall the stock market is a forward-looking tool – anticipating the future every day including what might happen with big tech. Those predictions however are imperfect to say the least.

While a rising index (S&P 500 in this case) can be seen as a good thing, as a forward-looking measure, when the index is led higher by just a small number of companies it can grossly mask the financial turbulence that’s really happening. In other words, the index can rise even when a majority of companies fall.

Over the past decade leading tech companies – notably Meta (Facebook), Alphabet (Google), Amazon, Apple, and Microsoft – have come to dominate their respective segments in most parts of the world. Some stats I found:

  • Meta, which also owns Instagram and WhatsApp, has some 3.5 billion users across its networks.
  • More than 50% of global online ad spending goes through Meta or Alphabet.
  • In search, Google has something like a 60% share in the U.S. and about 90% in Europe, Brazil, and India.
  • Apple earns more in annual profit than Starbucks makes in revenue. 

Anyone invested in the S&P 500 or tech ETF QQQ (like I have for a small portion of my portfolio) has enjoyed huge gains in recent years. 

Then and Now – QQQ

Yet the concern I have with this tech market domination and monopolies in general is that they are able to charge higher prices for various products or services than in a competitive marketplace – since there is no alternative (TINA) – and consumers can suffer the costs. 

This is not good.

We’ve seen this story play out before: breaking up the Standard Oil monopoly in 1911, the AT&T telephone monopoly in the ’70s and even Microsoft has had a few dominant eras on their own – including the birth of the PC. Then you add in issues and complexities like security and privacy related to increased digital connectedness – we’ve introduced means into our society that cannot be undone.

As an investor, I cannot ignore how powerful big tech is to juice my portfolio returns but I’m also wary that you can have too much of a good thing – things beyond my portfolio returns could suffer. 

More Weekend Reading – beyond pros and cons of owning Big Tech

Interesting question from @JimChuong on X recently:

I know my answer. You?

The Dividend Guy recently called Covered Call ETFs “a scam”. Ouch. I don’t invest in them either, Mike but I do know a number of investors that do.

You can learn more about covered call ETFs and the returns against some common stocks/indexes here. Not a good look for the covered call ETFs! 🙂

Weekend Reading – Covered Calls Edition

Partners and fans of this site, 5i Research highlighted the pros and cons of using hedged or unhedged ETFs for any Canadian DIY investor. When possible, go unhedged. 

“While there are pros and cons of both options, we think that if investors have the choice, unhedged ETFs are typically the better choice. The higher expenses of hedged ETFs can eat into returns, potentially more than the currency fluctuation. While this is not always the case, some of the largest S&P 500 funds offering both unhedged and hedged options display this phenomenon with the unhedged outperforming (VFV vs. VSP and XUS vs. XSP).” – 5i. 

Henry Mah, a passionate DIY investor, only owns a few stocks and is not worried about investing in just a select number of Canadian companies. Not that I’m worried at all about my approach but I do believe modest diversification beyond a handful of stocks for most investors is better. 

Not everyone is Bill Gates and can afford some concentration risk, just my own thoughts!

Weekend Reading - Should you live off dividends

Source: https://www.myownadvisor.ca/weekend-reading-should-you-live-off-dividends/

The problem with only owning a few stocks, at least only from Canada, is you are limiting your investing universe. Case in point, money makers like the following can not only payout juicy dividends but also offer capital appreciation. With thanks from Visual Capitalist – check out this cool graphic. 

“A lot has changed since the 1990s, especially in the business world.

To highlight these changes, we’ve visualized the top 10 U.S. companies by revenue, in both 1994 and 2023. Figures for 1994 were sourced from the American Business History Center, while 2023 figures come from the latest Fortune 500 ranking.” – Visual Capitalist @VisualCap

Some new Mercer analysis illustrates the potential impact of high interest rates and how it’s not always advisable to save for retirement, depending on where you are in your career. Interesting…

And…full retirement is really not for everyone since some cohorts / younger generations are considering “the soft life” or at least “the softer life”: where instead of aspiring to climb the corporate ladder, you instead focus and prioritize time and energy instead for what makes you happy. I’m not quite convinced this is just a millennial thing. I know a few Boomers and GenXers that have been thinking this way most of their lives…

Should You Aspire to the “Soft Life”?

2024 Federal Budget Hoopla!

Quite the 2024 Federal Budget news! In case you haven’t heard – to help cover some of its multi-billion dollar commitments, our government has introduced a higher tax rate on capital gains: it’s going up from the current 50 per cent to two thirds for annual capital gains over $250,000. 

I have a few mixed thoughts on this, but generally speaking, this is not good because more regulatory and fiscal barriers are very likely to continue to hinder “Canada’s attractiveness” – including investments in our country. A reminder this higher tax rate is not just a hit on individuals but impacts corporations including business owners. 

    1. Under the current tax rules – individuals – if you dispose of capital property (other than your principal residence; like a cottage) for a profit, only half (50%) of the capital gain is included in your taxable income. 
    2. Individuals an individual who realizes capital gains on or after June 25, 2024, will still be able to take advantage of the 50% inclusion rate on the first $250,000 of annual capital gains. This $250,000 limit is not prorated for 2024, and only applies to gains realized on or after June 25. This means all gains realized before June 25, 2024 as I understand it, will be subject to the current 50% rate which will apply to the first $250,000 of capital gains realized from June 25 onwards. Only any excess gains above and beyond the $250,000 annual threshold that are realized after June 25 will be subject to the new 66.7 per cent rate.
    3. Corporations – corporations won’t get the lower 50% inclusion rate on the first $250,000 of annual gains, meaning that from June 25 onwards, all corporate gains will be taxable at the new 66.7 per cent inclusion rate. So, this budget proposes to tax all capital gains earned by corporations and trusts at the two-thirds rate.


1. https://www.canada.ca/en/department-finance/news/2024/04/tax-fairness-for-every-generation.html
2. https://financialpost.com/personal-finance/taxes/what-to-know-increased-capital-gains-tax
3. https://www.cbc.ca/news/politics/capital-gains-tax-budget-1.7176370

Consider folks who are fortunate enough to have a secondary property that increased in value, they inherited this property or incorporated business owners who took risks and built a business, they may wish to sell that business eventually. This tax change is going to sting. And, for estate planning, be mindful of keeping too much money in your non-registered account(s) since the day you die, your estate will have to pay tax on the deemed realization at the new 66.7% rate for any capital gains above $250,000.Yikes.That said, some existing situations won’t change a thing. If you sell your primary residence for more than you paid – no capital gain. If you sell stocks and ETFs inside tax-sheltered (RRSPs/RRIFs) or tax-free accounts (TFSAs) – no capital gains.

The punchline?

Probably best to save, invest and prosper using registered investments as much as you can. 🙂

Save, Invest, Prosper!

As always, check my Deals page – partnerships and discounts to help you make the most out of your money – some of them you can’t find anywhere else!

Check out my partnerships with:

  • Dividend Stocks Rock (including my deep lifetime discount from Mike!)
  • 5i Research
  • StockTrades.ca
  • LegalWills
  • Borrowell 
  • and more!

As always, you can also consider reaching out here for some low-cost financial projections services – anytime.

Cashflows & Portfolios

I launched this service with my DIY investor good friend – a service founded by DIY investors for DIY investors without the conflict of any advice, without costly fees (like some folks charge), while offering money-back guarantees because we’d expect that as DIY folks ourselves…

In fact, there are now two (2) low-cost services to choose from:

  • Done-For-You – we do the work and data entry, and provide your reports OR 
  • DIY – whereby you do all the work, you do your own data entries, and you get your own results in the software – we essentially open up some professional financial software for you to use to be your own retirement income planner!

As a My Own Advisor reader, you always get a discount off either service. Just mention my site. That’s it.  

Enjoy your weekend and don’t worry about capital gains too much. Capital gains are generally “good problems” to have! 🙂


My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

22 Responses to "Weekend Reading – Pros and cons of owning Big Tech"

  1. Hello Mark. I appreciate your work. Regarding ” Big Tech” , we use a carefully thought out plan and then implement a tactic/ strategy to help in this area. A while back we put aside some seed American funds. ( from trimming JNJ after a strong run up in price) Our core dividend/ dividend growth portfolio remains intact while we take advantage of selected opportunities that come available from time to time. For example , about a year ago a number of worthy tech stocks were trading at multiple year lows though their futures still looked promising ,
    ( GOOG, AMZN ) so we put some funds to work in these companies. Within a year, these companies ” ran up” well over 50% and we took profits ( still waiting on GOOG for a while longer) Sometimes a few equities will continue to rise after taking profits (MSFT) , but that’s okay too. Taking greater risks with a small portion of set aside funds is fine, in my opinion, if considered in a prudent, thoughtful, careful approach.
    Take care . Mike

    1. Good stuff, Mike. We also added more tech in the last few years, a couple of years ago, via more QQQ. I like owning that ETF since I don’t have to worry/be concerned if GOOG, AMZN, MFST or other tech stock outperform or underperform each other – we own all the big boys in one simple ETF that makes up about 2% of our entire portfolio.


      I don’t intend to sell that ETF for a few decades from now.

      So, to your point, I also agree with being strategic and taking greater risks with a small portion of set aside funds…it can work out very well at times!

  2. Good question. Still working through the best withdrawal strategy. I suspect I’ll leave most of it as is, balancing off capital gains and losses over time but we’ll see. I wonder what others in my predicament are doing?

    1. That seems wise…I see the most successful retirees being able to smooth out taxation over a few decades while meeting their income needs – basically a balancing act to avoid lumpy tax hits and as a hedge when the government changes their mind. 🙂

      All my best to you!

      1. Yes, definitely a slow process. In the case of the LIF I will never be able to melt it down, just maintain it at it’s starting value due to maximum withdrawal rules. I am using a portion of the dividend income to cover taxes and transferring the maximum amount of stocks I can. I receive no actual income from this account. I figure I should transfer stocks from the LIF first since it is the least flexible account. If I have more space to fill in the TFSA after LIF transfer I will transfer stocks from the RRIF, paying tax from dividend cash. As I move dividend stocks into the TFSA, the dividend income increases, which increases the space created when I take the dividend cash out as income. My projections indicate using this method the large RRIF will start to drop at around age 75, and be gone at around age 85 assuming I live that long and my brain is working well enough to be able to manage the transfers. There is also the balancing act of trying to stay under the OAS clawback, time will tell how that will work out. Looks like it will be OK until age 75 when stock transfers to the TFSA are high enough to push income above the clawback starting point. At that point we will need to decide what is more important, keeping OAS or RRIF melt down to reduce taxes at death.

        1. Good stuff, Howard.

          Our plan has our RRSPs/RRIFs gone by early 70s and my small workplace pension will takeover around age 65 to cover off “lost income” should RRSPs/RRIFs be gone sooner.

          We’ll also, slowly, move non-reg. assets to TFSAs but I at least plan to max out TFSAs (both, need another $14k again) in Jan. 2025.

          If you have OAS clawback concerns, well, amazing and you’ve done VERY well.

          If it helps at all based on the projections work I do (?), there is HUGE merit in getting RRSPs/RRIFs down sooner (before ages 75 or 80) and in doing so, removing any estate liability with those accounts due to extreme taxation involved with any RRIF balance at time of death valued over $250k – loss of 50% of that give or take as you know if you are last surviving spouse/partner.


      2. Haha I wonder about that. Last time small businesses were a target they changed their mind. And the writing seems to be on the wall who will win the next election – taxation would likely change with another set of rules. My goal is to smooth out taxation and keep filling up my TFSA every year spending down what I earned. I’m not necessarily an advocate for “Die with Zero” but I do want to die with less and leave the rest for my kids.

        1. Yes, agreed. re: next federal election.

          I think that’s smart but I’m biased, what I see most successful retirees do: 1. smooth out taxation, while 2. meeting their income needs along with 3. where possible, fill up TFSA.

          Our plan is to “spend it all” by age 95 and our nuclear plan is to sell the condo eventually too if needed in our late-90s.

          1. Interesting! Maybe spend it all by age 99 😀 the issue I have with Die with Zero is we don’t know when we will die. Worst case there is something left in the estate rather than needing the nuclear option too soon.

            1. Totally, I get that. I do our own projections for my wife and I until age 95.

              At age 95, the nuclear plan kicks whereby we need to sell the home for living expenses beyond these sources: 1. CPP, 2. OAS, 3. some remaining TFSA assets and 4. my small workplace pension.

              At age 95, with 3% sustained inflation, our spending is estimated to be > $250k per year and growing with inflation (which seems bonkers) so hence the need to continue to evaluate our income plan every year and adjust as we age.


              1. Mark, in my projections I start to reduce our income requirements at age 75 and continue increasing the reduction until death. I have watched the activity level of my father who is currently 102, and I could see that traveling expenses drop off eventually, and life certainly gets simpler. Are you doing the same with your $250K at 95 calculation?

                1. Ya, I’ve run a few models/scenarios whereby we start at $X spending, in our “go-go” years/active retirement and then taper it off in our “slower-go” years/passive retirement.

                  1. Go-go years for us are age 50-79.
                  2. Slower-go years are > age 80.

                  To your point, only makes sense since otherwise you end up with lots of money (?) when potentially you don’t need it, as life becomes more simple to your point beyond healthcare. Your father is 102?? Wow. Incredible.

                  I’ve got quite a few projections ready. My baseline is 6% annualized returns and 3% sustainted inflation. You?

                  1. I am a 100% dividend stock guy, so i concentrate more on dividend growth. It is fairly high right now mostly due to my CNQ holding (hoping for that special dividend this year), but I plan to move away from oil and gas in the next few years so growth will drop down to the 6 to 8% range I think. I use 6% in my projections and just for fun I use 4 to 5% for capital growth. Inflation I use 3%. As you mention health care is something we need to plan for and living costs go up once we must move to a retirement home. We are handling my fathers financial affairs and we see first hand how expensive it is to live in a retirement home. As I’ve mentioned we are just trying to move as much from the RRIF/LIF to our TFSAs to reduce taxes and try to keep OAS for as long as possible.

                    1. CNQ is about 4% of my overall portfolio and likely to keep it there by adding new $$ into other stocks and ETFs over time – I use XAW for ex-Canada growth and QQQ for a tech kicker/some tech growth.

                      I too, am hoping for a special dividend from CNQ – likely to get some! 🙂

                      Ya, my baseline is 6% total return with 3% inflation but I have used 5% returns to be conservative now and then in a few reports.

                      Seems very smart to get RRSP/RRIF $$ out sooner than later. I see a few retirees that are absolutely shocked at how much taxation they will have in their 70s and early 80s since they did not consider taking RRSP/RRIF $ out over a period of time. Good problems to have I guess but things could have been managed better and now they know!

                      Keep me posted on your process, I enjoy learing from others on this stuff.

  3. Is 66.7% not better than being fully taxed on registered money? My plan is to slowly melt down our RRIF/LIF/RRSP into our TFSAs. Take out dividend income from TFSA to create space, and replace with stock from RRIF/LIF/RRSP. Works on spreadsheet, but lots of variables.

    1. Yes I think it is. 🙂 I have my registered accounts full already, so this is a question of whether it would have been better to have my non-reg investments in a Corp or personal account. It seems the latter would have been the best bet. Hindsight is 2020

    2. I see/hear a lot of retirees do that…re: take from RRSPs/RRIFs if they don’t need the $$ for spending and put into TFSA. But, tax rate is usually modest on those RRSP/RRIF withdrawals especially if you do that over time.

  4. I purposefully held retained earnings in my small business corp so I can retire early and draw down these funds that I worked hard for until I turn 65. I took the risk of investing my money, win some and lose some with the stock picks. I am happy paying my fair share of taxes, but now I’ll be taxed at a much higher rate taking the money out going forward – I could have paid myself a higher dividend over the last 10+ years, put the money in a personal non registered account and I’d pay the 50% capital gain instead of 67%. Total bummer as this definitely puts a wrinkle in what I planned. It isn’t the type of business I can sell – so I can’t make use of the other entrepreneur tax breaks being introduced. I think large corps have a way of finding tax loopholes, but this hurts the “little guy”. The philosophy was “integration” so it didn’t matter if the gains were inside or outside of the company, but now this is broken. All I can say is bummer

    1. A bummer indeed, Sandra. I appreciate your detailed comment. Are you going to continue to invest inside your corporation or simply start getting the $$ out faster via dividends paid to you and invest personally? re: TFSA, non-reg., etc?


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