US Tech bubble

US tech is especially vulnerable to a downturn with sky high valuations, which are propped up only by hype, rather than fundamentals.

Great stocks to buy for the upturn, terrible to hold during a downturn.


Article that has some nice stats about S&P500 earnings growth has mostly come from just a few companies. Key points:

  • Just five stocks — Facebook, Amazon, Apple, Microsoft and Alphabet — account for the S&P 500′s year-over-year EPS growth, according to Goldman Sachs.
  • “Mega-cap earnings strength contrasts with small-cap earnings weakness,” the firm’s analysts led by David Kostin said.
  • The “FAAMG” basket accounts for 18% of the total S&P 500 value. The last time there was such high concentration among just 5 names was during the tech bubble. This time around, however, Kostin said the market is on firmer ground.


So valuation premium by tech companies is mostly down to earnings growth.

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