With the year-to-date 55 percent collapse of LinkedIn stock, 38 percent plunge of Twitter stock and the 12 percent decline of Apple stock, is the Internet bubble bursting at the seams? One financial expert certainly thinks so.
Marko Kolanovic, JPMorgan’s global head of derivative and quantitative strategies, told CNBC this week that we are currently witnessing the bursting of the Internet bubble. Simply put: investors are seeing the collapse of the dot-com 2.0 bubble.
According to Kolanovic, on average, there is a 20 percent decrease on some of the major Internet and tech brands. He thinks that number could go as high as 35 percent in some cases.
The JPMorgan analyst alluded to some of the high growth Internet stocks – Facebook, Amazon, Netflix and Google – that are widely held by investors. He said there are some trouble spots in these FANG stocks.
Although he does see greater declines in the coming months, Kolanovic doesn’t think it will have an effect on the entire technology sector. In other words, value assets will still be a better investment option than momentum stocks.
“I wouldn’t say it’s a broad-based bubble in the tech sector. We certainly have some sub–industries within tech which are actually cheap,” he said.
For investors, he suggests that they head into gold, emerging markets and energy because he’s bullish on those.
But didn’t they say that it was different this time?
The FED has pumped the stock market so much over the last 7 years that the smart investors are taking profits out now.
This is causing many of the high earning favored stocks to take a bigger hit than normal. But any stock that has made money for their investors could see this happen, not just internet stocks.
Buy low, sell high, buy again when the price is lower.
Smart investors never just buy and hold. Fund managers do not do it, why should the average investor.