Some investors, regardless of whether Republican President Donald Trump or Democratic challenger Joe Biden won the election on Tuesday, have caused a massive backlash in the U.S. market this year with technology and telecommunications stocks. We are betting that we will face a tougher slog in the coming months.
Bets on big technology have been a risky proposal for the past decade, as stocks such as Amazon, Google and Netflix are soaring at the expense of so-called value and circulating stocks such as banks and energy companies.
But recently, some fund managers have said they are becoming more cautious about what they see as a consensus in Washington to tighten regulations, and another large-scale stimulus bill is tech-to-economically sensitive. We anticipate that it will boost rotation to other sectors, including value stocks.
“There is a shift, it’s starting, but it’s going to take some time,” said Max Gokman, head of asset allocation at Pacific Life Fund Advisors.
If Biden wins, as polls suggest, tech companies could face higher tax rates, tax sales, and tighter regulation, investors said.
Both Trump and Biden criticized large tech companies, but could not explicitly demand that they be dissolved. “Something is happening about the monopoly,” Trump said when asked about a major tech company.
David Einhorn, a longtime tech bear hedge fund manager at Greenlight Capital, wrote in a letter this week in the midst of a “huge bubble” that popped when the S & P 500 hit a record high on September 2, 2020. Said that there are high-tech stocks in. ..
Revenues from companies like Facebook, Alphabet and Amazon show how tech giants have expanded their business this year, but tech stocks plummeted last week’s sale.
“It’s getting harder for megacap technology to be surprised upwards,” an analyst at UBS Global Wealth Management said in a note on Friday.
Some investors have pointed out that a recent hearing in Washington is a sign that tighter regulation will be brought to the sector, regardless of which party controls Washington.
The Justice Department’s proceedings against Google in late October were the first time the US government had cracked down on a major tech company after suing Microsoft Corp MSFT.O for anti-competitive practices in 1998.
“This may be the only bipartisan issue in the world,” said Gawkman of Pacific Life.
Investors say Biden’s $ 2 trillion stimulus, which leads Trump by 10 points in national polls, could make unfavorable stocks such as construction machinery and materials companies more attractive. ..
The shift to value equities “is more likely to happen in the next 12 months,” said Eduardo Costa, who runs LP, hedge fund Calixto Global Investors.
According to investors, Calixto, which invests primarily in tech, media and telecom stocks, has returned 30% since January.
The potentially high taxes under the Biden administration are another concern. Biden is proposing to raise the corporate tax rate from 21% to 28%, which could put pressure on corporate profits.
Another proposal to tax capital gains and dividends as recurring profit, analysts said, could encourage some investors to sell their winners to fix a lower tax rate.
Brian Jacobsen, senior investment strategist at Wells Fargo Asset Management, said his company underestimates the Nasdaq Composite and makes much of its portfolio more compelling valuations, especially industrial circulation stocks. He said he was moving to.
“We did some scenario analysis and thinking through different permutations about who controls Congress and the White House. Our general view is that it may not be that important.” He said.
(Report by David Randall and Svea Herbst-Bayliss; edited by David Gregorio)
(Only the headlines and photos in this report may have been reworked by Business Standard staff. The rest of the content is automatically generated from the syndicate feed.)
Trump vs. Biden: Wall Street expects Big Tech’s slogan no matter who wins
Source link Trump vs. Biden: Wall Street expects Big Tech’s slogan no matter who wins