For investors thinking of buying the dip, we suggest you consider two parallel trends in 2018. In first half of 2018, “FAANG” stocks drove 50 percent of the S&P 500 gains, while deregulation momentum in the U.S. suggested the tech regulation happening in Europe would stay in Europe.
But in the last six months, tech has given away all its gains, and attitudes toward tech regulation in the U.S. have flipped for investors, politicians, the media and the broader public. Tech companies are no doubt currently profitable, but unexpectedly negative disclosures from management at Facebook, Apple and Alphabet continue to fuel investor anxiety.
Tech valuations were priced for the most growth but were not priced for additional risks to that growth – thus they have been the whipping boy of Mr. Market, in a correction that has hit all stocks.
Don’t underestimate the lingering negative consequences of this trend. The technology manufactured by Big Tech is used in the operations of…
