Thank you for the interesting article. A question about the bottom-line: Can you point out one or more cases in the past where a sector experienced a mania/bubble of the scale (or close) as the recent TMT and then stayed up while other sectors caught up? feel free to look at places outside of the US. 2000 surely wasn't one example.
But yes, 2000 was the bearish rotation pathway, things got way too overhyped vs stage of tech runway and there was nothing to take up the slack particularly as recession began to set in and earnings/fundamental story could not catch-up to price fast enough to offset valuation mean reversion.
I think the risks of downside for tech now (and it taking the rest of the market down with it) are credible, but just looking at the bull case in isolation for commodities, EM/global, and cyclical/value sectors... I do think we can make a case for at least decent absolute and relative performance from those (and a chance that it holds the market up or even becomes the new market leader.
Probably there is some risk that if you get investors mass-migrating out of tech and a sustained period of lower stock prices becoming self-fulfilling in rugging the tech sector to the extent it impacts capex/jobs and triggers a slowdown in tech (and spillover risk to the wider economy).
Thanks for keeping us informed, painting the current "tech picture" along with what's next, best- and worst-case scenarios. Great information, keep it coming!
Have we totally left the logic of the P/E ratio behind, that it doesn’t matter any more the worth of a company to its earnings? That stocks valued 31 times more than their earnings are not a problem? What then is the logic point? That they can never reduce to long term averages — 16 X earnings? What then is the new valuation metric? Please help me find the new metric n/w/s trend or momentum. Thanks for an outstanding article, Dan
Is it main streets time to succeed? Are the main picks and shovels play ready to run for the next few months. Consumer Staples, Industrial stocks have been performing significantly well during these first 2 months of 26’ let’s see if they can continue in which The IGP Paradox believes they will. Tech will be back as there are no better allocators of capitol as some of these Mag 7 CEO’s who have been around the block but, as mentioned just got a little ahead of themselves.
Thank you for the interesting article. A question about the bottom-line: Can you point out one or more cases in the past where a sector experienced a mania/bubble of the scale (or close) as the recent TMT and then stayed up while other sectors caught up? feel free to look at places outside of the US. 2000 surely wasn't one example.
Good question, will dig into it.
But yes, 2000 was the bearish rotation pathway, things got way too overhyped vs stage of tech runway and there was nothing to take up the slack particularly as recession began to set in and earnings/fundamental story could not catch-up to price fast enough to offset valuation mean reversion.
I think the risks of downside for tech now (and it taking the rest of the market down with it) are credible, but just looking at the bull case in isolation for commodities, EM/global, and cyclical/value sectors... I do think we can make a case for at least decent absolute and relative performance from those (and a chance that it holds the market up or even becomes the new market leader.
Probably there is some risk that if you get investors mass-migrating out of tech and a sustained period of lower stock prices becoming self-fulfilling in rugging the tech sector to the extent it impacts capex/jobs and triggers a slowdown in tech (and spillover risk to the wider economy).
Thanks for keeping us informed, painting the current "tech picture" along with what's next, best- and worst-case scenarios. Great information, keep it coming!
Thanks Paul, I appreciate the kind words. It is my pleasure!
Have we totally left the logic of the P/E ratio behind, that it doesn’t matter any more the worth of a company to its earnings? That stocks valued 31 times more than their earnings are not a problem? What then is the logic point? That they can never reduce to long term averages — 16 X earnings? What then is the new valuation metric? Please help me find the new metric n/w/s trend or momentum. Thanks for an outstanding article, Dan
Enjoy these “off topics”. BTC once again shows it’s an asset class correlated to tech sector
Cheers! Yes indeed, and as some have pointed out, the correlation with the faltering subsector of Software has been even closer..
Is it main streets time to succeed? Are the main picks and shovels play ready to run for the next few months. Consumer Staples, Industrial stocks have been performing significantly well during these first 2 months of 26’ let’s see if they can continue in which The IGP Paradox believes they will. Tech will be back as there are no better allocators of capitol as some of these Mag 7 CEO’s who have been around the block but, as mentioned just got a little ahead of themselves.