Since mid-March when the Coronavirus pandemic raged in Europe and the United States, the technology sector has not stopped rising. In today’s reflection we wonder if it is a trend that is here to stay, or rather a financial bubble. Let the bets run …
In the midst of so much uncertainty that exists in the world’s economies, the technology sector seems not to stop, scoring maximum after maximum.
The confinement has caused a strong demand for technological services, which has logically pushed large companies to all-time highs, such as Amazon.
The stock market has shown mixed results in 2020, due to the impact of the Coronavirus in large sectors of the economy. Now, technology is undoubtedly the big winner.
Nasdaq Tech Index Has Cumulative Yield of 24% in 2020. For its part, the Dow Jones lost 4%, clearly showing that technology stocks are preferred by large investors.
As long as the Coronavirus is still present, surely the demand for the technology will continue to rise. The big question is what will happen when the ghost of Covid-19 begins to dissipate. Will the bubble burst?
What is clear is that nothing goes up forever, that has been shown by stock market history with the number of financial bubbles that have burst. I do not want to say that we are facing one, but it is necessary to be very cautious with this sector, since there are “indications” that some stocks may be overvalued.
Where to keep the money?
If you think in the medium and long term, few assets seem safe to preserve the value of money. For now the metals (Gold and Silver) and Bitcoin have shown solid returns in the pandemic. Although nothing is certain in the financial markets, having a good percentage of Gold and BTC in our portfolio can be interesting.
Other interesting sectors to invest, always thinking about defending the value of our savings, can be the Yen and the Swiss Franc, currencies that have managed throughout history to be a refuge in times of uncertainty.
Do you have any other financial assets that you consider safe? Let us know in the comment box.
I say goodbye until tomorrow with this phrase from William Feather:
“One of the fun things about the stock market is that every time one person buys, another person sells, and they both think they are smart.”