Of course, the discounting of future earnings should hurt all stocks. But it should hurt technology stocks more than others, because so many of them are valued at extremely high levels relative to their current earnings.
Sentiment: NEGATIVE
Stock prices relative to company assets are no better at signaling the likelihood of future earnings growth than they were the day the Titanic sank, and risk management is a good deal worse.
Sometimes it takes longer to create value, but if the companies generate more earnings, the stocks will ultimately reflect that.
I don't think objectively we are in a tech bubble when tech stocks are at a 30 year low.
Approaches to determining stock values vary, but fundamentally, each company judging itself undervalued is saying that its future stream of earnings justifies a higher price than the stock market is willing to accord it.
Investors have been too willing to buy stocks with strong reported earnings, even if they do not understand how the earnings are produced.
It's one of the fundamental principles of the stock market: When interest rates go up, stocks go down. And along with financial companies and cyclicals, technology companies - with their sky-high price-to-earnings multiples - should be among the biggest losers in an environment of rising rates.
Tech stocks are trading at a 30-year-low when compared to the multiples of industrials (companies). It's the weirdest bubble when everyone hates everything.
To know whether stocks are cheap or pricey, we typically look at price-to-earnings ratio. Valuation is a tougher question than many folks realize.
Good, bad or indifferent, if you are not investing in new technology, you are going to be left behind.
Today's stock market actually hates technology, as shown by all-time low price/earnings ratios for major public technology companies.