Hariseldon58 wrote:Edinburgh Worldwide is also proving interesting...
In what way, as in also taken a big hit, and has potential to fall further or bounce back?
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Hariseldon58 wrote:Edinburgh Worldwide is also proving interesting...
Hariseldon58 wrote:SMT I bought this morning at 10.28 down from 14.15 within the last month, 27% off, in the same ballpark. Interesting.
bluedonkey wrote:At 1029p, that's a 27% drop from its high. I'm no TA expert but that seems to be more than a correction, more like a trend (down).
unperplex wrote:Yes, Adamski, I hope they rise soon, but I am in no hurry.
My last two purchases were at 1149 and1167 .
The proposals of Sunak (and, as I understand it, other finance ministers worldwide) to increase taxes on “tech companies” may affect the share price of say Amazon (a substantial holding of SMT), but not, I trust, Meituan and some of SMT’s other Chinese favourites.
Adamski wrote:some thoughts... What sparked this sell off was the Treasury yield spiking after the Fed chief's recent remarks. So the market is now expecting some inflation and some interest rate increases. Which is supposed to hurt growth stocks, and help value stocks. So we have a rotation from growth to value, as we did end of last year. But wouldn't surprise me, if just like last time, we have a retreat back from value to growth again.
Why? Because, the value stocks have been wrecked by 12 months of economy wrecking by covid pandemic, and these companies aren't suddenly going to be profitable again.
And the inflation expectation may be overdone. And the tech sell off may be overdone as well. Hence I'm expecting a bounce back next few weeks, maybe even next few days. May be wrong, but in my just 3 years investing, seen bounce back after tech sell off several times. This is a big one, but It seems to be a fairly regular event every few months.
OllyDrod wrote:Adamski wrote:some thoughts... What sparked this sell off was the Treasury yield spiking after the Fed chief's recent remarks. So the market is now expecting some inflation and some interest rate increases. Which is supposed to hurt growth stocks, and help value stocks. So we have a rotation from growth to value, as we did end of last year. But wouldn't surprise me, if just like last time, we have a retreat back from value to growth again.
Why? Because, the value stocks have been wrecked by 12 months of economy wrecking by covid pandemic, and these companies aren't suddenly going to be profitable again.
And the inflation expectation may be overdone. And the tech sell off may be overdone as well. Hence I'm expecting a bounce back next few weeks, maybe even next few days. May be wrong, but in my just 3 years investing, seen bounce back after tech sell off several times. This is a big one, but It seems to be a fairly regular event every few months.
They've been 'wrecked' by discretionary consumer spending being severely curtailed due to lock-down restrictions. Taking the UK as an example, assuming restrictions are lifted this year as planned, and consumer spending patterns resume some semblance of normality, why wouldn't they become profitable again?
There are shades of grey here of course (airlines and travel in particular may take longer to recover) but I'd expect hospitality, entertainment, retail, etc to have a bumper summer! I'm certainly looking forward to visiting my local, having a few meals out and generally getting out of the house and having some fun. I highly doubt that I'm alone in this. If people are 'out and about' (rather than at home and in front of the telly/laptop), it seems logical that some of the star performers of the pandemic will see a drop in demand as a key driver for their stellar short-term performance is removed (eg: Just Eat, Netflix, Amazon). Long-term, I'd expect these firms to continue to do well - structural drivers for their success remain - but I certainly won't be surprised if this correction goes on into the summer (no doubt with some peaks and troughs along the way). This may be pronounced if the narrative around the resurgence of 'value' takes hold and investors come to believe that they no longer have to be in 'growth' in order to get a decent return; and if noise around inflation and rising interest rates continues.
- OllyDrod
Dod101 wrote:But value stocks have been out of favour for years so why would a return to 'normality' make them favourites? It is quite likely, certainly if lockdown is more or less lifted in the second half of this year, for value stocks to recover, but that would still make them out of favour.
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