At one point it was down 17% year to date, from its January high of around 4,796, but as of Friday it’s off 13.8% in 2022. Reached an all-time high of approximately 36,799, but is now off about 9.46% this year, while the S&P 500 Just after the new year, the Dow Jones Industrial Average Which are placed in different categories such as communications/interactive media services and consumer discretionary. Anytime a sector gets 30%, something bad happens and it goes back down.” He pointed out that the industrial companies suffered from this in the 1930s and the energy and oil business was the biggest sector in the S&P 500 in the 1970s.īy the end of last year, the information-technology sector was approaching that limit, weighted at 29.5% of the S&P 500 in December, and that IT sector does not even include some of the biggest names in tech, such as Alphabet Inc. ”At some point things get too weighted and they unwind themselves. “In the dot-com era, tech was over 30% of the S&P and we saw it blow up,” Connaughton told MarketWatch last July. “I would rather take advantage of this downdraft and buy really great companies.”Ĭonnaughton gave a prescient warning to investors last year in this column, noting that tech stocks were getting close to a dangerous level. That still beats the pants off what you are getting in the S&P overall.” He said this is not a market he wants to buy through an ETF. “Of course, you are going to slow down because so many were pandemic beneficiaries. Tech revenue growth had still been outpacing the growth rate of the S&P 500 as a sector, he said. Some market mavens believe investors need to choose wisely if they decide to wade into these stocks at these depressed prices.īrendan Connaughton, founder and managing partner of Catalyst Partners, is not worried about the future of tech, but he advises investors to look at individual stocks and their fundamentals, instead of index funds and ETF investing right now. Different sectors and specific companies will react differently after years of growth were piled into the first two years of the COVID-19 pandemic. The answer may be that tech will not move as one overall group. The big question for investors is what happens next, as declining tech stocks keep pushing overall markets closer to official bear-market territory. “For the last two years valuations haven’t made any sense, people have speculated and won, but no one should think it was investing at those values…Markets are cyclical, neither extreme lasts very long.”
“In the aggregate, then as now, the numbers didn’t make sense,” said Lise Buyer, founder of Class V Group, which helps companies go public.
The sharp downfall of tech stocks through the first five months of this year has wiped away those gains. More than six years ago, MarketWatch explained how the rise in tech stocks was different from the dot-com boom, due to the coinciding growth in mobile devices and apps and cloud computing, but the past two years of unsustainable pandemic-fueled gains and an investing flurry changed that dynamic.
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