Some of the key drivers of Tech, FANGS, and others have been under pressure recently and in our view, could be a driving force in an equity sell-off. This Tech slump is orderly but there are growing concerns that it may continue in a less-orderly fashion as regulatory fears (much like those in the Cryptoworld) and a sudden change in attitudes toward top Tech firms could impact investing goals of some investors. In short, some investors think there is more pain to come.
There has been a consumer backlash against big Tech because of a data sharing scandal – namely the Cambridge Analytica and harvested data. Some high profile users of Facebook have deleted accounts as a result. In addition, there is a growing concern about regulation, which has also hit the Cryptoworld as well, driving Tech stocks lower. Senate Judiciary Chairman Chuck Grassley called on several leaders to testify at a hearing – Facebook, Google and Twitter were mentioned.
Note that there has been a massive rally in FANG stocks (Facebook, Amazon, Netflix and Google) in recent years and there is talk that these stocks could reprice lower as investors lock in profits and rotate to other sectors.
Here at Classiarius, we have seen several warning signs – note our previous videos and articles on the March to June 2018 period for Cryptocurrencies and our growing concerns for global equity markets for early to mid-April.