Looking at a recent client survey, Deutsche Bank’s Jim Reid reminds readers in his daily Chart of the Day note that “there have been huge fears that there is a bubble in US tech (and Bitcoin) with around 90% of respondents thinking both were in a bubble” which explains the rollercoaster in tech stock this week.
That said, Reid correctly caveats that his audience “is probably (on average) not the natural buyer of these assets so it’s a sentiment observation rather than a positioning tool” – in other words a bunch of poseurs (many of whom wish they were long bitcoin) something we have frequently said about that other Fund Manager Survey, from Bank of America. Even so, in most of the client meetings Reid has had this year, the topic of tech valuations comes up and he as a result, he speculates as to “what impact a tech bubble bursting might have on the overall market.”
It today’s CoTD he looks at 2000 as a case study: the spectacular tech bubble burst in March 2000 and by YE had lost more than half its peak value. However, although the S&P 500 fell around -10% in 2000, six of the ten headline sectors were higher over the course of the year with Utilities (+51.7%), Healthcare (+35.5%) and Financials (+23.4%) leading the way!