The more flippant the investing cliché, the more you should question it. Consider “the bigger they are, the harder they fall.”
At their lows this week, the technology shares that have until recently been the stock market’s darlings — Facebook, Amazon.com, Netflix, Google’s parent company Alphabet and other giants — had fallen more than 17% since March 13. Over the same period, U.S. stocks overall fell 8%.
At first, the drop in big tech stocks seems driven by bad news that is bound to worsen: Facebook improperly sharing personal data, President Trump criticizing Amazon, European regulators investigating potential antitrust violations.
Or could this just be a stumble? Have big tech companies developed an unstoppable business model?
The idea might not be quite as crazy as it sounds….
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This article was originally published on The Wall Street Journal.
Further reading
Jason Zweig, Your Money and Your Brain
Jason Zweig, The Devil’s Financial Dictionary
Benjamin Graham, The Intelligent Investor
Hendrik Bessembinder, Do Stocks Outperform Treasury Bills?
J.B. Heaton, Nick Polson and Jan Witte, Why Indexing Works
David Durand, Growth Stocks and the St. Petersburg Paradox
Laurence B. Siegel, The Rules of Growth: Organisms, Cities and Companies
Epoch Investment Partners, When ‘Bits’ Meet ‘Atoms’