Tech Rally will continue despite moral outrage

Sometimes stock analysts should just not say anything. But the urge to comment is great, and unfortunate objurgations from people who should know better have added high comedy to the markets this week.

This past week has seen a massive pullback from the high points that tech stocks across the world had been seeing. This provoked a lot of gloom-and-doom mumbling among some analysts; however, we fear these are not among the best and the brightest.

The better take is that a dynamic rally that brought tech stocks to new highs in the past few months had to hit resistance eventually, and it is at that point where the big institutional investors start taking profits, meaning that they sell off in large amounts. This, of course, leads to a pullback.

Now we’re clearly in the first part of a new phase for the rally. Once tech stock prices got cheap enough, investors started piling in again. Why? Because big tech has become a fundamental part of our economy, particularly after the restructuring that has taken place during the pandemic. And these companies are riding the cusp of the wave of digital transformation that is changing corporations all across the world.

Yet analyst rhetoric seems to miss all this. So, with Tesla, clearly the best performer (a performance which drove Elon Musk to fifth place on Forbes list of the world’s richest men) was accompanied by expressions of moral sentiment: “High valuations in the mega-cap stocks are stretched far beyond historical levels,” said Bruce Bittles, chief investment strategist at Baird. Analysts pointed to excessive optimism in the market which often suggests a consolidation/correction phase is likely.”

Of course, by Thursday, Tesla was back up again to $366.28, an 11 per cent gain (For the year, Tesla shares are up 337 per

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