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America's Five Biggest Tech Stocks Lost $97 Billion Friday (yahoo.com)
An anonymous reader quotes CNBC:
The so-called "big five" -- Apple , Alphabet Class A shares, Microsoft , Facebook and Amazon -- lost more than $97.5 billion in market value between the close on Thursday and the close on Friday, according to FactSet, dragging the Nasdaq to its worst week of the year. Shares of Apple fell nearly 4 percent on Friday, while the other four companies fell more than 3 percent. For most of the day, only 3 stocks in the S&P 500 tech sector were in the green: IBM , Teradata and Western Union . Apple, Facebook, Amazon, Netflix, and Alphabet all traded more than 2 times their 30-day average volume... "They're just plain overbought," said David Bahnsen founder, managing director and chief investment officer of The Bahnsen Group, a private wealth management firm. "They are extremely stretched from a valuation standpoint."
CNN notes the drop occurred "after a Goldman Sachs analyst questioned this year's run-up in the industry's five biggest names." They also added that "The top five techs today account for 13% of the market value weighting in the S&P 500, even though they are only 1% of the companies in the index."
CNN notes the drop occurred "after a Goldman Sachs analyst questioned this year's run-up in the industry's five biggest names." They also added that "The top five techs today account for 13% of the market value weighting in the S&P 500, even though they are only 1% of the companies in the index."
All you have to do is look at the P/E ratios of the S&P500 to see that current stock valuations aren't based on fundamentals.
The PE for the S&P is about 25. That is a 4% ROI. Apple's PE is about 18, which is an ROI of over 5%. Ten year T-bills pay 2.5%. So unless you think interest rates are going to soar, stock prices look reasonable.
Amazon's PE is WAY higher (over 500) but Amazon is a growth stock. You don't buy AMZN for the dividends.
If/when rationality returns to the market, it'll be a bloodbath.
I have heard a lot of chicken-littles voice both of these opinions:
1. Robots/AI are going to steal all the jobs, and all the wealth will go to capital.
2. Stocks are way overvalued
If you believe both of these, you have some severe cognitive dissonance.
Disclaimer: I don't believe either of these things.