Tech Stocks and the Dot-com "Echo"
by Bob Stokes
Updated: June 14, 2022
You probably recall the bursting of the dot-com bubble when the tech-heavy Nasdaq 100 plummeted 78% between March 2000 and October 2002.
In recent months, a slew of financial articles compares today's "tech wreck" to that dot-com crash of about 20 years ago.
Here are just a couple of sample headlines:
- 'Tech wreck' looks more like another dotcom bubble bursting (March 9, The Financial Times)
- It's looking a lot like the dot-com crash again. ... (May 22, Fortune)
It's been said that history may not repeat exactly but it does often rhyme. And the current downturn in many tech names does remind of that dot-com bubble.
You may be interested in knowing that our Global Market Perspective provided this prescient warning as far back as November 2020:
Big tech is transitioning from a bull market to a bear market at a high degree of trend, so downside surprises should become the norm.
Price shocks across the tech sector began almost immediately after that analysis.
Here's the latest from our June 2022 Global Market Perspective:
French IT company Atos dropped 12% on January 7, 2021, and investors have sold the stock relentlessly ever since. Sweden's Spotify, the world's largest music streaming service, peaked in February 2021 and fell 70% to its current level. Switzerland's Logitech (computer peripherals) and Germany's Infineon Technologies (semiconductors) held up a bit longer, but the companies' bear-to-date losses have piled up to 50% and 36%, respectively.
So, yes, the current trend in the tech sector does rhyme with the dot-com bust -- or, call it an "echo." Here's more analysis from the June Global Market Perspective:
It took until November 2021 for the broader technology complex to reverse. The Stoxx 600 Technology Index peaked after failing to surpass its top from the dot-com mania, and, at this point, the "echo bubble" is producing a host of air pockets, flash crashes and general market disturbances.
Here's what you need to know: In addition to the European tech sector, our Global Market Perspective offers insights into U.S. and Asian-Pacific tech names and indexes.
You'll also find analysis of other stock market indexes, cryptocurrencies, forex, bonds, crude oil, gold, silver -- all in all, more than 50 worldwide financial markets -- as you follow the link below.
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