(September 2020)
With the decline in big tech stocks a month ago and increasing breadth across indexes in the last couple of weeks, there has been increasing concern about the risks associated with tech megacaps. Worries about holding FAAMG have lost some of their potency with investors. That is a mistake, according to Societe Generale, who has just warned investors it is time to cash in their chips on those stocks. SocGen reminds investors that by the end of August, technology comprised 64% of the S&P 500, close to the 70% reached in the early 2000s tech bubble. They argue that with the economy healing and potential increases for regulation in the sector, it is time to look elsewhere.
(New York)
FINSUM + Magnifi: There is a lot to unpack here. The comparison to the tech bubble in the early 2000s is unfair and fairly irrelevant. Tech companies in the S&P 500 are highly profitable and look nothing like they did in 2000. The larger view though—whether tech shares are providing value in the context of an improving economy and the possibility for regulation—is a much better question.
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