Big Tech is 'richly priced' — but investors will need it to beat the market, Prof Damodaran says | Markets Insider

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Big Tech is 'richly priced' — but investors will need it to beat the market, Prof Damodaran says

Aswath Damodaran, professor of finance at NYU Stern School of Business, told CNBC that big tech is"richly priced."

The professor said investors who don't own any big tech right now might not want to buy at the moment.Aswath Damodaran, professor of finance at NYU Stern School of Business, told CNBC on Friday that all of the Big Tech stocks are"richly priced," but essential for investors. However, the professor, sometimes referred to as the"Dean of Valuation," cautioned new tech investors against jumping into big tech at the moment. For instance, he said it would be"asking for trouble" to enter Apple right now because the stock is currently"priced to perfection." But, investors who already have Apple in their portfolios should pay attention to Damodaran's strategy.

Damodaran added that each of the big tech companies is built on a solid foundation. Each company has a"cash machine business," he said — Apple has the iPhone, Amazon has prime, and Google and Facebook profit from online advertising. This, along with the fact that the companies collect massive amounts of data and have"hundreds of millions of users" who are"on their ecosystem for hours," makes the companies especially strong, according to Damodaran.

 

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That’s it right there, outperforming indices (“the markets”) when big tech weighs so heavy requires even overweighing that same big tech, thus becoming a self sustaining circle, no escape

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