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Be careful with tech stocks as bubble talk reignites

Facebook, Apple, Amazon, Netflix and Google

The tech sector is on a roll, contributing nearly 30 per cent of total global equity returns over the past five years, double the next best sector. But cracks are starting to appear, and the growth may not be sustainable.

Technology just keeps growing

The big-name FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) have skyrocketed with the two As becoming the first companies to top $1 trillion in US market history, before Microsoft followed in 2019.

This growth in the tech sector has spurred on the Nasdaq as a whole, with a record-breaking high being reached in April. Not only are the highs high, but the lows are almost non-existent, with only one week of negative growth for the entire 2019.

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Stay sceptical

The Nasdaq has recouped the losses from the final quarter of 2018, with many investors forgetting about the turbulent times at the end of 2018. Questions must be asked with such strong numbers: Has the market overcorrected?

“Questions, rightly, are being raised as to whether valuations are overblown, whether we are building towards a second tech bubble or, alternatively, whether the technology revolution is only just beginning,” ETF Securities said in a recent update.

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Be careful with tech stocks as bubble talk reignites
Facebook, Apple, Amazon, Netflix and Google
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