Rising rates have hammered tech stocks broadly this year, but riskier companies have been hit especially hard. It’s a dramatic reversal from the steady climb they enjoyed during the pandemic, when economic stimulus and the Fed’s easy-money policies spurred a flurry of speculative buying.Article content
“While it’s never a great idea to be in low-quality names, these look especially risky now as the conditions for speculation have reversed.” Higher rates hurt shares of unprofitable and high-valuation growth companies the most, because their shares are priced on their prospects far out in the future, with bond yields used to discount into today’s dollars the value of earnings that companies may not see for years.
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