FNArena’s Weekly Insights – January 31 2022
In this week’s Weekly Insights:
-February Looks Tricky
-Conviction Calls
-FNArena Talks
February Looks Tricky
By Rudi Filapek-Vandyck, Editor FNArena
2022 is already shaping up as a much more volatile and challenging year for investors, and we’re still only at the beginning!
Geopolitics aside, the Big Question that is now on investors’ mind is whether the January sell-off has gone too far already, or should we expect more downward pressure for longer? Equities have, broadly taken, sold off by -10%, by -20%, or by more depending on valuations, sectors and whether there has been a specific bad news event.
Even more telling is that circa 50% of the technology stocks included in the Nasdaq are now -50% or more below their share price peak from last year. Taking a broad glance over price charts, there’s a fair argument to be made the correction/de-rating for global technology stocks has been causing havoc, to various degrees, for about three months now.
There will come a time when enough is enough, not because bond yields will not rise forever but because many of today’s technology darlings are high quality, well-run businesses and they are still carried by megatrends. Megatrends, as I like to point out, last beyond a few rate hikes here and there and the occasional bubble in market exuberance.
Irrespectively, the market is always ready to teach investors harsh, but valuable lessons. It’s our choice whether we want to learn from those experiences, or not.
