Share Performance in Jul 21

Summary

The indices we follow (as shown in the table) do not really convey the significance of the (largely) Q2 results announced in July. NASDAQ, TechMark and the FTSE Software and Computing Services Indices all advanced between 1% -3% in July. But all are still showing impressive gains YTD – NASDAQ up 14%, Techmark100 up 11% and the FTSE SCS Index up 16%. All have outpaced the FTSE100 which, with a 9% gain, has hardly been sluggish either.

The rebound in ‘non-tech’ stocks is understandable given the battering they had in 2020 and the high expectations of a rebound as C-19 pressures ease (we hope!) But tech had a stonking 2020  (indeed has had a ‘Very Good C-19’) and many expected growth to slow in 2021. That just hasn’t happened – so far. But the expectation is that this slowdown WILL be evident in Q3 & 4. Some pundits are forecasting a ‘bursting of the bubble’ with a major ‘correction’. But we’ve heard that many times before and it just ain’t happened. Tech is nowhere near as highly valued as it was in 2000 and is now a crucial/essential part of both corporate and consumer life.

Outlook?

If you believed the pundits, tech is in for a big correction. But they have been saying that for as long as I can remember and if you had taken note you would have missed out on some pretty hefty gains. Problem is that one day they will be right (a bit like a stopped clock tells the right time twice a day!)

It is obvious that as Q3 and Q4 in 2020 were such bumper quarters for Big Tech, comparisons this year are bound to look a bit more subdued. But the trends in Big Tech during lockdown are not likely to go into reverse. Online shopping, WFH etc are ‘here to stay’. Expect corrections along the way but a massive Bear Market in Tech doesn’t seem that likely to me!

And, for the record, it is a long time since I sold any of my tech stocks…

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Posted by Richard Holway at '12:33'