The tech stock rout: what the experts think
Brutal April, dot-bust redux and a re-balancing act

Brutal April
Boris Johnson has reportedly joined “a final push” to persuade the Cambridge-based chip designer Arm to list in London. The seller, SoftBank, has a strong preference for New York, the default destination for Big Tech listings. But nowhere is safe these days, said Laurence Fletcher in the FT. High-growth tech stocks have officially “entered a bear market” – defined as a 20% or more fall from a recent high – ending “one of the most lucrative trades of recent years”. The MSCI World Growth Index has fallen 22% since its November high, and “April has been particularly brutal”. Among the big casualties are Cathie Wood’s Ark Innovation fund, a former “poster child” of tech investment, which has lost 48% this year. The most gung-ho UK investor, Scottish Mortgage Trust, is down 34%.
Dot-bust redux?
“It’s now dawning on people that there’s more to investing than handing out capital like lollipops at a school fete to anyone with an idea for flying taxis or carbon-free hotdogs,” said Barry Norris of Argonaut Capital. Indeed, there’s a feeling that we’ve been here before, said David Brenchley in The Times. The dot com bubble, which began to burst in 2000, took two years to fully deflate. Are we already in the middle of a similar crash? Some of the biggest fallers – such as tech-related lockdown winners like Zoom, Peloton and Moderna – have lost 65-85% of their value since their most recent highs. Even the NYSE Fang+ Index, which tracks the biggest tech shares, is down 27% this year, after recent steep declines at Netflix and Amazon.
Re-balancing act
Of course, as Richard Hunter of Interactive Investor points out, investors ignore established tech giants at their peril. Many have “dominant, and in some cases, unassailable, positions in their market…They are prime examples of what Warren Buffett would describe as having a ‘moat’ around the business,” he told The Times. Indeed, David Coombs of Rathbone suggests this could be the chance to build the tech portfolio “you have always wanted”. More cautious voices urge “rebalancing”. If you decide to stick with tech, said Laith Khalaf of AJ Bell, give yourself “a buffer against recession” with some “old economy stocks” that pay resilient dividends too.
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