Posts filed under “Technology”
Today, I hope to explain how the crash of the speculative tech names is a positive.
Last month, we noted that “High-Flying Tech Stocks Were Coming Back to Earth.” Some of the companies we reviewed then included Twitter Inc., LinkedIn Corp., Netflix Inc., Tesla Motors Inc., Priceline Group Inc., Google Inc. and Facebook Inc. Since then, shares of these companies have fallen even further.
Have a look at how much these high fliers have declined from their recent all-time highs (all returns are as of yesterday’s close).
To borrow from Martha Stewart, This is a good thing.
To anyone concerned about a speculative tech bubble, as some seem to be, then letting the air out of that bubble should be a positive, right? A reduction of euphoria reflects a return to reason.
Let’s take this exercise a step further, and cherry-pick the hot and not so hot names from 2013.
Take a look at the next chart. The stocks on the green half are those of conservative health-care and consumer-staple companies. They are doing well this year, but they underperformed in 2013.
The other half is last year’s all stars.
The average return of the conservative boring green companies in 2013 was 22 percent, a gain equal to about two-thirds of the stock market’s rise. But this year’s losers were monsters last year, with an average a return of 174 percent.
What conclusion can you draw from this? Hot money is becoming downright respectable (or at least is trying to). Markets are going through a rebalancing, with money leaving the high-flying stocks with stretched valuations and finding a home in shares of companies with higher dividends and more reasonable price-earnings ratios.
This is something to embrace, not reject.
Buy This Dip? By Peter T. Treadway April 21, 2014 The Innovation Economy begins with discovery and culminates in speculation… And so at each stage the Innovation Economy depends on sources of funding that are decoupled from concern for economic return. Throughout the history of capitalism, financial bubbles have emerged and exploded…Read More
OrCam camera device is one of Israel’s Top 10 advances in vision. Hebrew University Prof. Amnon Shashua created this device that attaches to eyeglasses and is wired to a portable computer in the wearer’s pocket. Using bone conduction technology, it “speaks” text (menus, street signs, grocery labels, newspapers) as well as bus numbers and other objects that the user points to. It can even recognize faces and monitor traffic lights.
On “60 Minutes” last night, author Michael Lewis made a bland assertion: High-frequency traders, he said, working with U.S. stock exchanges and big banks, have rigged the markets in their own favor. The only surprising thing about Lewis’s assertion was that anyone could be even remotely surprised by it. The math on trading is simple:…Read More
It’s a game with more than 500 levels that pulls your emotional triggers. It seduces, provides instant satisfaction, frustrates, amuses and knows how to get you to keep on playing. 32 percent of players say they have ignored family and friends and even left children stranded at school while engaging with those blinking jelly beans. We look at why are so many people are hooked on Candy Crush.
A star is born:
Source: Bloomberg, March 26 2014
Fall from recent highs Source: RWM Some of the most prominent names in technology are getting shellacked today. These companies got way ahead of themselves and now they are, well, to be polite, let’s just call it “retrenching,” as they give up a large percentage of their gains. I don’t think that Twitter Inc.,…Read More