During the TMT bubble, each tech stock peaked when its valuation peaked (not when its revenue growth peaked).
The Fed is currently super easy but with valuations extremely stretched for many COVID beneficiaries, the reopening of the economy *might* be a risk for these stocks.
The Fed is currently super easy but with valuations extremely stretched for many COVID beneficiaries, the reopening of the economy *might* be a risk for these stocks.
For my part, I've been reducing my enterprise software exposure and have already brought it down from ~50% to just under 30% of my portfolio.
If valuations stretch further, will reduce even more.
If valuations stretch further, will reduce even more.
Clarification -
Enterprise software with its recurring revenues is a fantastic business and many of these companies will continue to grow for a very long time and power global businesses.
However, their current market caps appear quite bloated relative to their revenues...
Enterprise software with its recurring revenues is a fantastic business and many of these companies will continue to grow for a very long time and power global businesses.
However, their current market caps appear quite bloated relative to their revenues...
...and cash flows.
Historically, such a situation has always resolved by poor forward multi-year returns
Given the uncertainty/elevated risk, I've been reducing my exposure to this sector and am re-allocating my portfolio to benefit from the reopening of the economy.
Historically, such a situation has always resolved by poor forward multi-year returns
Given the uncertainty/elevated risk, I've been reducing my exposure to this sector and am re-allocating my portfolio to benefit from the reopening of the economy.
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