Tech stocks have sold off more than they should, strategist argues

00:00 Speaker A

Where are those public equity plays that you’re looking across and saying, okay, it’s still good to have some type of exposure?

00:09 Speaker B

Yeah, and by no means are we arguing that people should go away from asset allocation, you shouldn’t abandon equity exposure. The US is still the greatest economy in the world, um, fortunately, from everything we analyze will continue to be for a variety of reasons. Um, so to the point we’re discussing, if you look across markets now, I think a few things jump out. One is again, I’ll I’ll talk more broadly about the NASDAQ. The NASDAQ right now is about 18% more expensive than the S&P, but you’re getting about 42 to 45% more earnings growth. Um, so that’s a very different environment than say 21, or even um, you know, through Q3 of last year. Uh, furthermore, if you look at the Russell, that’s an area where you still have, we think, overvaluation relative to fundamentals. Uh, the Russell, you know, the the actual revenue growth in a very strong nominal GDP environment has only been around two to three percent. So you’ve been getting about half the revenue growth, over 40% of the companies don’t make money, and it’s actually valued more expensively than the S&P. So, to to the point you’re making in regard to Mike Wilson, um, we don’t always agree with Mike, love Mike. He’s he’s fantastic, but in this case, it does look like tech has uh, sold off more than it should relative to the fundamentals. And as you know, there’s this is a tech driven sell off from the start, not only because of the extended valuations, but also the questions on open AI. And then when once the tariffs hit, that’s when you really had the plunge, and you started to see that rebound. That being said, we do expect markets to be much choppier, much sloppier this year, and we we always thought you weren’t going to get multiple expansion. Now that you’ve gotten some multiple compression, um, at least you have if your time horizons is a year, two years, three years, you have potential upside to upside economic surprise, earning surprises.