In order to break down and appreciate the makeup of what has happened in technology, we need to look deeper and see how the basic price to multiple (PE Multiple) now trades in this leading sector. Using the index on Bloomberg (IXTTR Index) that leads the technology ETF, the Technology Select Sector SPDR ETF (XLK), we illustrate how earnings expectations are high for this sector that currently trades at 30.91x, which is 27.25 times Year End Estimates, and 23.56 times 2021 estimates. Fair or not, this is evidence of expectations which have been historically priced in a range of 18-22×. On September 9, 2020, we wrote about how Apple (AAPL) stock when it had a market value of $2 Trillion, or about two times its historical PE multiple (see link: Burton Malkeil, ESG and Expectations of 12% Returns). This is important math because as an overweighted index position it has arguably made its price performance somewhat self-fulfilling so long as it continues to exceed profit expectations. Put differently, indexes that are market cap weighted have two important characterizations – they have survivorship bias, and their winners rise to the top. With that in mind as we write this article, Apple’s stock is about 6.4% of the S&P 500 Index, and Microsoft’s is 5.6%. Amazon and Facebook are the second two largest positions, at 4.7% and 2.22%. See complete holdings for SPY here. When the large falter or provide a digestion proble as an important ingredient to a recipe, is that a failure of a short-term phenomenon? Time will tell whether Apple’s September 2, 2020 high of almost $138 will be revisited, but watch for earnings on October 30th?