Any participant in retirement funds incorporating a good slug of the S&P500 has benefitted from “silicon valley’s” success. From Gemini:
An individual participating in a 401(k) via a standard S&P 500 index fund has essentially been a "silent partner" in the Silicon Valley boom. Even without working for a tech company, your retirement account has likely been transformed by two specific forces: sector creep and earnings concentration.
1. The "Hidden" Tech Portfolio
When you invest in an S&P 500 fund, you aren't just buying a broad slice of America; you are buying an increasingly tech-heavy portfolio.
* Passive Allocation Growth: In the mid-90s, the "Information Technology" sector was a small fraction (roughly 7-10%) of the index. By early 2026, tech and tech-adjacent companies (like Alphabet, Meta, and Amazon) represent nearly 45% of the S&P 500's total value.
* The "Magnificent" Tailwinds: In recent years (2023–2025), a tiny group of companies—often called the "Magnificent Seven"—accounted for over 50% of the S&P 500’s total annual returns. If you held an index fund in your 401(k), you captured those gains automatically without ever having to pick a single winning stock.
2. Diversified Risk, Tech-Sized Rewards
The primary benefit for the non-tech worker is the asymmetric upside.
* Floor vs. Ceiling: By staying in an S&P 500 fund, you kept the "safety net" of other sectors (Healthcare, Utilities, Industrials) during tech pullbacks, but you were fully exposed to the explosive growth of the cloud and AI eras.
* The "Free Rider" Effect: As these tech giants expanded globally, they pulled the entire index upward. For example, in 2025, the tech sector was responsible for approximately 63% of the S&P 500's total return. Without those tech names, the index would have returned roughly 6%; with them, it returned nearly 18%.
As discussed, tech companies have the highest international revenue exposure. When you invest in an S&P 500 fund, your 401(k) is essentially a global play.
* Currency and Market Hedges: Because tech giants earn so much abroad, your retirement fund benefits when global markets grow, even if the domestic U.S. economy is sluggish.
* Scale without Cost: Software and digital platforms scale globally with very little "extra" physical cost. Those high margins flow directly into the index fund's share price, boosting your 401(k) balance more efficiently than traditional manufacturing or retail companies could.
Would you like me to look up how your specific portfolio might be affected by current 2026 tax laws regarding RMDs or Roth conversions, given the high growth you've likely seen in these funds?
Bay area native here. The lack of development in silicon valley is shocking. there are some apartment complexes going up, but it is by and large single family homes and the local areas have made it hard to add more housing. They have some legit concerns - the infrastructure is outdated and insufficient to serve the metro area, it costs too much to add public transit, etc. but simultaneously adding tens of thousands of high paying jobs while building tens of housing units has been disastrous. It is so expensive, traffic sucks, and you get none of the cultural benefits of a big city.
“…because among other things it creates techbro billionaires, who are corrupting our politics.”I’m perplexed MY doesn’t address what is the main point of the quote from Krugman. What a coincidence that today’s Thomas Edsall’s NYTs article does just that with considerable depth.
“…it generates techbro billionaires, who are corrupting our politics.” MY’s entire reply to Krugman seems to ignore this concern. What a coincidence this Thomas Edsall article appeared in today’s NYTs.
The article is 125% correct and all the people trying to nitpick are just weirdly wrong about every objection they raise. Like, wrong in straightforward and obvious ways, including and perhaps especially people who had solid comment histories.
For those who haven't had the pleasure of visiting the SV in the South Bay, it is truly staggering how low-density it is compared to all the value it generates. Think of all the global economic engines throughout history: London, NYC, Tokyo ... and then go to Mountain View, Menlo Park, and Cupertino - home to Alphabet, Meta, and Apple, respectively - and drive through the SFH neighborhoods and strip malls. These cities should look like downtown Seattle or San Diego at a minimum, if not Manhattan!
That said, the newer tech hubs of Austin and Seattle have cityscapes much more in line with the economic value being created, so is the South Bay a historical anomaly? If so, why? Might be a good article idea.
And can any of our DMV/NoVa people provide insight as to what Amazon HQ2's buildout in that area is doing to the built environment? Is it evolving to look more like SV or more like Seattle? If the latter, then Silicon Valley really will stand out as a complete anomaly.
Most people don’t want to move far from where they grew up. 70% of people live within 100 miles of their childhood home. It’s not an easy flight from San Fran to the middle of the country and it’s not drivable. An interesting hypothetical would be what if instead of Silicon Valley the tech revolution centered around a city like Atlanta, Dallas, or Chicago. Would there be more domestic migration to a tech boom in one of those cities? Would it be as heavily immigrant (or would immigrants skew European compared to Asian).
You might ask why the administration is trying to brow-beat other countries for help opening the Straits of Hormuz if the U.S. military is so capable. Why can’t they do it themselves?
The reality is that the U.S. military told the administration that trying to do so would most certainly result in burning and sunken warships.
Seems like this post is hand-waving another necessary condition: "Of course, mega-growth would have caused lots of traffic jams and stressed infrastructure and required the construction of new bridges or tunnels across the bay and new roads and rail lines. But it is possible to do these things."
This is the worst kind of Matt take. He ignores the real question: how do we maintain a democracy with gigantic power disparities. The wealthiest people live completely apart from the rest of America. They buy or have their wealth from media platforms they now overtly use to manipulate how understand reality. They pay huge amounts of money to influence elections and a significant chunk of them don’t believe in democracy.
Yes, we’ve seen some amazing advances in technology and some of them are truly transformative in the best ways. But most of it is just change that makes use neither happier nor more fulfilled and contented than we were in the past. Indeed, much of the growth has been in technologies we recognize as being harmful to use emotionally, creating a dangerously divided country billionaires can isolate themselves from.
Massive wealth inequality id fundamentally at odds with democracy. Pretending this is just not enough housing is absurd.
Why would we need to build high-rises in Sausalito if we had the transporter technology available in Star Trek, which would allow us to live anywhere and travel nearly instantaneously to any other place? I consider myself a YIMBY, but "commute time" and the electrification of transit do not seem like they would be important issues in the STU.
Because Sausalito is beautiful and has great weather and is next to the Pacific. Even if there were no tech jobs or Silicon Valley, many many more people ought to have the option of living there should they so choose!
Any participant in retirement funds incorporating a good slug of the S&P500 has benefitted from “silicon valley’s” success. From Gemini:
An individual participating in a 401(k) via a standard S&P 500 index fund has essentially been a "silent partner" in the Silicon Valley boom. Even without working for a tech company, your retirement account has likely been transformed by two specific forces: sector creep and earnings concentration.
1. The "Hidden" Tech Portfolio
When you invest in an S&P 500 fund, you aren't just buying a broad slice of America; you are buying an increasingly tech-heavy portfolio.
* Passive Allocation Growth: In the mid-90s, the "Information Technology" sector was a small fraction (roughly 7-10%) of the index. By early 2026, tech and tech-adjacent companies (like Alphabet, Meta, and Amazon) represent nearly 45% of the S&P 500's total value.
* The "Magnificent" Tailwinds: In recent years (2023–2025), a tiny group of companies—often called the "Magnificent Seven"—accounted for over 50% of the S&P 500’s total annual returns. If you held an index fund in your 401(k), you captured those gains automatically without ever having to pick a single winning stock.
2. Diversified Risk, Tech-Sized Rewards
The primary benefit for the non-tech worker is the asymmetric upside.
* Floor vs. Ceiling: By staying in an S&P 500 fund, you kept the "safety net" of other sectors (Healthcare, Utilities, Industrials) during tech pullbacks, but you were fully exposed to the explosive growth of the cloud and AI eras.
* The "Free Rider" Effect: As these tech giants expanded globally, they pulled the entire index upward. For example, in 2025, the tech sector was responsible for approximately 63% of the S&P 500's total return. Without those tech names, the index would have returned roughly 6%; with them, it returned nearly 18%.
How Your 401(k) Changed (30-Year Snapshot)
| Metric | 1996 (Approx) | 2026 (Projected) |
|---|---|---|
| Tech Weighting | ~8% | ~30% (Direct) / ~45% (Broad) |
| Index Concentration | Top 10 = ~18% | Top 10 = ~35% (Mostly Tech) |
| Global Revenue Exposure | ~20% | ~59% (For Tech Sector) |
3. Profiting from Globalization
As discussed, tech companies have the highest international revenue exposure. When you invest in an S&P 500 fund, your 401(k) is essentially a global play.
* Currency and Market Hedges: Because tech giants earn so much abroad, your retirement fund benefits when global markets grow, even if the domestic U.S. economy is sluggish.
* Scale without Cost: Software and digital platforms scale globally with very little "extra" physical cost. Those high margins flow directly into the index fund's share price, boosting your 401(k) balance more efficiently than traditional manufacturing or retail companies could.
Would you like me to look up how your specific portfolio might be affected by current 2026 tax laws regarding RMDs or Roth conversions, given the high growth you've likely seen in these funds?
I enjoyed this post, as I am someone living in Columbus who would like to move to the bay area
Bay area native here. The lack of development in silicon valley is shocking. there are some apartment complexes going up, but it is by and large single family homes and the local areas have made it hard to add more housing. They have some legit concerns - the infrastructure is outdated and insufficient to serve the metro area, it costs too much to add public transit, etc. but simultaneously adding tens of thousands of high paying jobs while building tens of housing units has been disastrous. It is so expensive, traffic sucks, and you get none of the cultural benefits of a big city.
“ But is there any actual benefit accruing to people in Columbus,…”
It’s ironic this passage briefly talking about Columbus, OH came out the day I moved from there😂
There actually is a benefit to Columbus. Google has a data center on the outskirts of the city. Pays pretty well to.
“…because among other things it creates techbro billionaires, who are corrupting our politics.”I’m perplexed MY doesn’t address what is the main point of the quote from Krugman. What a coincidence that today’s Thomas Edsall’s NYTs article does just that with considerable depth.
https://www.nytimes.com/2026/03/17/opinion/ai-economy-trump-future.html?unlocked_article_code=1.T1A.ZyfY.h9X-bcLfTsTI&smid=nytcore-ios-share
“…it generates techbro billionaires, who are corrupting our politics.” MY’s entire reply to Krugman seems to ignore this concern. What a coincidence this Thomas Edsall article appeared in today’s NYTs.
https://www.nytimes.com/2026/03/17/opinion/ai-economy-trump-future.html?unlocked_article_code=1.T1A.ZyfY.h9X-bcLfTsTI&smid=nytcore-ios-share
Total thread cancer.
The article is 125% correct and all the people trying to nitpick are just weirdly wrong about every objection they raise. Like, wrong in straightforward and obvious ways, including and perhaps especially people who had solid comment histories.
What is going on?
I'm pretty sure it's the case that America employs a lot more "tech occupation" types than Europe does. And those jobs pay really well!
My equivalent job in Europe doesn't even exist I don't think. Or its at least 1,000 times more rare.
In defense of Silicon Valley, i.e. the companies, it is not their fault that the Bay Area restricts housing supply. That is the fault of the Boomers!
For those who haven't had the pleasure of visiting the SV in the South Bay, it is truly staggering how low-density it is compared to all the value it generates. Think of all the global economic engines throughout history: London, NYC, Tokyo ... and then go to Mountain View, Menlo Park, and Cupertino - home to Alphabet, Meta, and Apple, respectively - and drive through the SFH neighborhoods and strip malls. These cities should look like downtown Seattle or San Diego at a minimum, if not Manhattan!
That said, the newer tech hubs of Austin and Seattle have cityscapes much more in line with the economic value being created, so is the South Bay a historical anomaly? If so, why? Might be a good article idea.
And can any of our DMV/NoVa people provide insight as to what Amazon HQ2's buildout in that area is doing to the built environment? Is it evolving to look more like SV or more like Seattle? If the latter, then Silicon Valley really will stand out as a complete anomaly.
Most people don’t want to move far from where they grew up. 70% of people live within 100 miles of their childhood home. It’s not an easy flight from San Fran to the middle of the country and it’s not drivable. An interesting hypothetical would be what if instead of Silicon Valley the tech revolution centered around a city like Atlanta, Dallas, or Chicago. Would there be more domestic migration to a tech boom in one of those cities? Would it be as heavily immigrant (or would immigrants skew European compared to Asian).
If noticed that people in general, but even here, use “tech” as a catch-all. For example, “social-media” is tech.
But it’s not really. It is an application enabled by tech, but in and of itself, is not tech.
You might ask why the administration is trying to brow-beat other countries for help opening the Straits of Hormuz if the U.S. military is so capable. Why can’t they do it themselves?
The reality is that the U.S. military told the administration that trying to do so would most certainly result in burning and sunken warships.
Seems like this post is hand-waving another necessary condition: "Of course, mega-growth would have caused lots of traffic jams and stressed infrastructure and required the construction of new bridges or tunnels across the bay and new roads and rail lines. But it is possible to do these things."
This is the worst kind of Matt take. He ignores the real question: how do we maintain a democracy with gigantic power disparities. The wealthiest people live completely apart from the rest of America. They buy or have their wealth from media platforms they now overtly use to manipulate how understand reality. They pay huge amounts of money to influence elections and a significant chunk of them don’t believe in democracy.
Yes, we’ve seen some amazing advances in technology and some of them are truly transformative in the best ways. But most of it is just change that makes use neither happier nor more fulfilled and contented than we were in the past. Indeed, much of the growth has been in technologies we recognize as being harmful to use emotionally, creating a dangerously divided country billionaires can isolate themselves from.
Massive wealth inequality id fundamentally at odds with democracy. Pretending this is just not enough housing is absurd.
Why would we need to build high-rises in Sausalito if we had the transporter technology available in Star Trek, which would allow us to live anywhere and travel nearly instantaneously to any other place? I consider myself a YIMBY, but "commute time" and the electrification of transit do not seem like they would be important issues in the STU.
Because Sausalito is beautiful and has great weather and is next to the Pacific. Even if there were no tech jobs or Silicon Valley, many many more people ought to have the option of living there should they so choose!
In the Star Trek Universe? Pretty sure Sausalito would rank fairly low on the totem pole of beauty.