2022 has come to an end. There is a good saying, "No one has a thousand days, no flowers are red for a hundred days." In the past, "fangs" or simply FAANGs large technology stocks were warmly welcomed by the market, but since the beginning of this year, investors' claims surrounding large U.S. technology companies seem to have broken down. Well-known U.S. stock listed companies such as $Amazon.US, $Alphabet.US,$Alphabet(GOOG)$
So as for the reason why "scupped stocks" will fall one by one in 2022? In this regard, I think we should first review the space-time background before the surge in technology stocks. Here I will roughly sort out my knowledge for you. U.S. stock technology rose explosively during the COVID-19 period in 2020. In addition to the wave of quantitative easing incentives by the Federal Reserve and central banks, another point is that people's livelihood habits suddenly changed greatly at that time, causing some enterprises to get extraordinary one-time income, resulting in a large increase in stock prices. For example, Netflix benefited a lot at that time. In addition, the almost "all-at-home office" due to the sudden prevalence of COVID-19 has also caused a simultaneous surge in many technology-related stocks, whether directly or indirectly. After all, during the virus epidemic, when humans can only move in restricted areas, they are naturally more inseparable from technological products and services.
In addition, in the past period, market analysts and investors have also been overly optimistic and overestimated the valuation of these technology stocks, resulting in irrational market speculation aggravating the valuation bubble of technology stocks. However, at present, the market is almost "waking up like a dream", because they realize that extraordinary returns are not sustainable. Therefore, the phenomenon we see this year is the fall of "sclear stocks" and other technology stocks one after another. Not to mention small and medium-sized U.S. technology stocks, some of them have even plummeted by more than 70%. So I think the overall decline of U.S. technology stocks throughout 2022 is the process of the market moving towards "normalization" valuation.
So does U.S. stock technology still have a future? I think the future direction of U.S. stock technology will depend on the development of the field of science and technology. If a field of science and technology can continue to maintain a strong growth momentum and potential in the future, then technology stocks in that field will certainly have potential in the future. However, it is worth noting that the current background of the Federal Reserve and other central banks are actively raising interest rates, which is a big blow and pressure on U.S. stock technology companies with high interest rate sensitivity, because under the low interest rate environment of more than a decade or so, many U.S. stock technology companies have actually overleveraging and capital investment, and With the end of the low interest rate environment and the slowdown of the global economy, I think even the performance of U.S. technology stocks such as Apple in the first quarter of next year may not be optimistic. Previously, enterprises that over-lending or overleveraging will face considerable challenges due to the interest rate hike cycle, and the market will also reassess their market value.
Many times investors may be optimistic about the prospects of a field, but not every enterprise that develops in this field will stand out. For example, although electric vehicles are a promising field, in fact, not all the bosses of electric vehicles have good performance, and they generally have a lot of high quality. Investors must be clear about the conditions. Then the field of science and technology is ever-changing. Maybe this year's trend is still there, but it may be replaced in a few years, so I always believe that investing in the field of science and technology must have quite keen insight, be able to grasp the trend in the field of science and technology, know what is about to go, and what is about to rise. Otherwise, investors will use the "glorious" data of the past to buy and keep adding technology stock companies that are about to "the general trend is gone". I think this is a quite risky and deadly investment.
Maybe investors think I'm short of U.S. technology stocks, but in fact, it's not. Technology is quite important to us human beings, and the prospect is certainly there. But I think the direction of technology investment in 2023 may need to be conservative, that is to say, investors should not be obsessed with market analysts or management to continue to "draw big cakes" valuations and prospects. In recent years, the stock prices of some start-up technology companies, especially those without actual revenue, have soared. When the actual performance of the market is not as good as expected, the stock prices of these companies will also fall sharply. Therefore, investors should pay attention to whether the investment company has actual revenue and profitability, and should make a practical assessment of the company's future growth potential to reduce investment risk. In addition, investors should also pay attention to their portfolio to ensure that they are not betting too much on a single technology company or technology field.
Finally, I think the market's current preference for investing in technology stocks has also shifted. If the market tended to be bigger in the past, it seems that those technology companies with reasonable or low valuations and have a fairly stable dividend distribution policy, such as $IBM.US, $Hewlett Packard Enterprise.US Companies such as $Intel.US and $Cisco.US. If we look at the "pictured above", the stock price performance of IBM and Hewlett so far this year is better than that of the standard 500 technology sector. Therefore, I strongly believe that if investors want to invest in technology stocks in 2023, value-based technology stocks should be a good choice, coupled with strong and stable balance sheets and businesses, so even if the economy of 2023 is worse than we expected, it will not be too daunting, because it provides a certain degree of security. The edge. At the end, I must emphasize the above views that are purely personal and very subjective. I think the direction of U.S. stock technology investment in 2023 should be "decent from virtual to reality", and the market will look at very practical numbers rather than "drawing big cakes" enterprises.
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