This translation has been automatically generated and has not been verified for accuracy.As expensive as tech shares have become after their enormous run-up of the past few months, they still appear attractive in comparison to many other businesses, according to Ian de Verteuil, head of portfolio strategy at CIBC World Markets.
To be sure, the 30 years he initially studied include the dot-com mania of the late 1990s, when tech stocks soared to absurd heights. The inclusion of that period in historical comparisons has the potential to flatter current tech valuations by making today’s run-up seem minor in comparison. The tech sector’s current valuation is 3.4 standard deviations above its average of the past 15 years. Some other sectors are substantially further away.
“But this requires an investor to believe in a V-shaped economic recovery,” he cautions. “We are not in that camp.” These virtues largely justify their stratospheric valuations, he concedes. The outstanding quality of these half-dozen near-monopolies is tough to dispute.The real danger, Mr. Rasmussen says, lies in the vast crowd of supposed “growth” companies that are both more expensive than these tech leaders and lower quality in terms of such factors as earnings growth and profitability. That describes roughly 500 of the 3,000 largest U.S. stocks.
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