The Tech industry has been hot this year, with some stocks valuation at nearly two-decade highs. For a while, it looked like this sector had been unwavering in this bullish market, but as we all know… change can happen on a dime.
More recently, it seems like the market’s bullish run may be waning, so what does this mean for tech stocks overall?
Let’s take a look…Throughout this new mini-series I’ll be talking all about the tech sector, how I might expect it to change in the coming months, and what risks I’m factoring in when considering tech stocks. This week, I’ll dive in deeper to the recent slow down of purchases after months of heaving buying.
Why Has This Sector Seen A Slow Down Recently?
There are several factors I see as to why this slowing is occurring.
For starters, we’re on the cusp on an election. Generally, this slowed pace of money flow to US tech stocks is normal in an election year. Particularly in an election year in which the economy is in a recession and the incumbent is falling behind in the polls.
Now before I move on any further, I’m keeping politics out of this. Regardless of who you support, that’s your choice. I’m just looking at past performance of candidates, the state of the economy, the outcome of the election, and how all of that has historically affected the market. This is trading. We’re just playing the market and riding whatever waves come from it.
Back To Stocks…
Based on the historical data and my analysis, that’s why I’m viewing the action in the stock market as one that wants a repeat of the stock market growth over the last four years. Yet it sees it slipping away into a pool of uncertainty.
If there’s one thing the stock market hates more than anything, it’s uncertainty and discord — both of which will continue to ramp up in the weeks ahead.
Another reason we could explain the slowing is the recent death of Chief Justice Ruth Bader Ginsburg. This will surely throw more fuel on the fire within the political realm, and I don’t anticipate investors to demonstrate confidence in the market until we get more clarity with the on-going election.
Tune in for next week’s episode where I aim to explain why, despite the almost record breaking highs, I still think Tech stocks are good buys.