When global economies went into lockdown and stocks spiraled into a free fall, the hunt was on among investors for companies that would best weather the storm. Understanding the collapse of tech stocks means going back to the pandemic bear market and recession of 2020. “A lot of the current performance is really the result of unwinding their excess performance,” Sosnick says. In 2008, tech stocks weren’t hit nearly as hard, but the carnage during that bear market was focused on financials and economically sensitive stocks, rather than tech names. The same 138 days after tech stocks hit their peak in March 2000, the sector was down 16.5%. At this stage, the downdraft is comparable to other bear markets in history.įor example, technology stocks are down 27.2% from the Morningstar tech indexes’ peak on Dec. There’s no doubt that these are big, painful declines given the state of the market and investor sentiment at the close of 2021. And this can work both ways-to the upside and to the downside.” Big Losses, but After Big Gains “But if too many people think the same way it can often drive a disconnect between the price people pay for a stock, and what it's worth. "One big lesson is a behavioral one, and it relates to crowding, or a herd mentality-an investment could possess a great deal of merit-a strong business case, impressive growth trajectory, strong balance sheet etc.,'' he says. Tyler Dann, head of research for the Americas at Morningstar Investment Management, says investors can glean a number of lessons from the tech stock selloff.
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