SMT recent performance

BuildTheWall

itwasntme001 said

I'm not disputing any of that.  I own all three of the stocks you mention and I am happy to hold.  The fact is valuations also depend on interest rates.  That is all I am saying.

Disagree. Their growth prospects have little to do with inflation. 

BuildTheWall

itwasntme001 said:

Thrugelmir said:

itwasntme001 said:

BuildTheWall said:

itwasntme001 said:

It is why we got a tech sell-off at the start of 2018 because there was an inflation upside surprise (which itself caused a rise in interest rates) and it is partly why we got a sell-off at the end of 2018 as the FED was looking to move more hawkish (which was U-turned in 2019).

Markets seem to be expecting low inflation for a very long time and so it is not surprising growth/tech stocks have done so well. 

Tech stocks have very little correlation with inflation. Their revenues are dependant on other industries spending on technology, automation and advertising. Which in turn depends on global economic growth. 

A lot of these sell offs happen when global growth indicators indicate slowdown of some form or other. Real Interest rates have been moving quite a bit but have hardly crossed 2%. In fact Fed is signalling it is willing to allow even more inflation before raising rates - which again has no direct impact on tech stocks. 

Last I checked real interest rates were negative both in the UK (comfortably) and US for the 10 year term.

Reflects a fair degree of economic pessimism in some quarters. 

Yep and it looks like they will stay like that for some time.  Only way to reduce the debt burden.

Reduction of debt is a consequence of low rates, not a cause of low rates. 

itwasntme001

BuildTheWall said:

itwasntme001 said

I'm not disputing any of that.  I own all three of the stocks you mention and I am happy to hold.  The fact is valuations also depend on interest rates.  That is all I am saying.

Disagree. Their growth prospects have little to do with inflation. 

You shouldn't confuse interest rates with inflation...

itwasntme001

BuildTheWall said:

itwasntme001 said:

Thrugelmir said:

itwasntme001 said:

BuildTheWall said:

itwasntme001 said:

It is why we got a tech sell-off at the start of 2018 because there was an inflation upside surprise (which itself caused a rise in interest rates) and it is partly why we got a sell-off at the end of 2018 as the FED was looking to move more hawkish (which was U-turned in 2019).

Markets seem to be expecting low inflation for a very long time and so it is not surprising growth/tech stocks have done so well. 

Tech stocks have very little correlation with inflation. Their revenues are dependant on other industries spending on technology, automation and advertising. Which in turn depends on global economic growth. 

A lot of these sell offs happen when global growth indicators indicate slowdown of some form or other. Real Interest rates have been moving quite a bit but have hardly crossed 2%. In fact Fed is signalling it is willing to allow even more inflation before raising rates - which again has no direct impact on tech stocks. 

Last I checked real interest rates were negative both in the UK (comfortably) and US for the 10 year term.

Reflects a fair degree of economic pessimism in some quarters. 

Yep and it looks like they will stay like that for some time.  Only way to reduce the debt burden.

Reduction of debt is a consequence of low rates, not a cause of low rates. 

No idea what you mean by this but lowering interest rates clearly helps to reduce the debt burden.

BuildTheWall

itwasntme001 said:

BuildTheWall said:

itwasntme001 said

I'm not disputing any of that.  I own all three of the stocks you mention and I am happy to hold.  The fact is valuations also depend on interest rates.  That is all I am saying.

Disagree. Their growth prospects have little to do with inflation. 

You shouldn't confuse interest rates with inflation...

My bad, was supposed to say interest rates. Doesn’t matter anyway given interest rates go up when inflation goes up. And both have negligible impact on tech stocks. 

BuildTheWall

itwasntme001 said:

BuildTheWall said:

itwasntme001 said:

Thrugelmir said:

itwasntme001 said:

BuildTheWall said:

itwasntme001 said:

It is why we got a tech sell-off at the start of 2018 because there was an inflation upside surprise (which itself caused a rise in interest rates) and it is partly why we got a sell-off at the end of 2018 as the FED was looking to move more hawkish (which was U-turned in 2019).

Markets seem to be expecting low inflation for a very long time and so it is not surprising growth/tech stocks have done so well. 

Tech stocks have very little correlation with inflation. Their revenues are dependant on other industries spending on technology, automation and advertising. Which in turn depends on global economic growth. 

A lot of these sell offs happen when global growth indicators indicate slowdown of some form or other. Real Interest rates have been moving quite a bit but have hardly crossed 2%. In fact Fed is signalling it is willing to allow even more inflation before raising rates - which again has no direct impact on tech stocks. 

Last I checked real interest rates were negative both in the UK (comfortably) and US for the 10 year term.

Reflects a fair degree of economic pessimism in some quarters. 

Yep and it looks like they will stay like that for some time.  Only way to reduce the debt burden.

Reduction of debt is a consequence of low rates, not a cause of low rates. 

No idea what you mean by this but lowering interest rates clearly helps to reduce the debt burden.

Interest rates are lower due to low inflation and the central bank wants to use this opportunity to pump liquidity and funding to the economy. 

Rates are not lowered to reduce government’s debt burden. The reduction of debt burden is therefore a consequence, not the primary aim for reducing rates. 

Moe_The_Bartender

Thrugelmir said:

Hence the saying   "No one ever went broke by taking profits" 

While goes against the mantra of running your winners. Stocks that have high levels of volatility are the ones where ultimately you'll get your fingers burnt.  As it's money flow that's driving market performance not underlying financial performance. 

The question you always have to ask yourself is 'would I buy more at this price?' If the answer is 'yes', don’t sell. If it's no, seriously consider selling or trimming. In the end, it’s all a matter of personal judgement. Guesswork, in short.

Ciprico

POLAR CAPITAL TECHNOLOGY TRUST PLC (PCT) seems to compliment SMT nicely,
(in top 10) 
PCT does not contain Tesla or Netflix
SMT does not contain Apple, Microsoft, Alpabet, Facebook, Samsung
Only commonality (in top 10) is Amazon and the Chinese internet companies Tencent & Alibaba
If you're nervous about US Tech, it's irrelevant, but it does give a degree of diversifiaction in the sector, and if you feel the largest threat is these mega companies being forced to split up, this could be helpful

itwasntme001

123mat123 said:

POLAR CAPITAL TECHNOLOGY TRUST PLC (PCT) seems to compliment SMT nicely,
(in top 10) 
PCT does not contain Tesla or Netflix
SMT does not contain Apple, Microsoft, Alpabet, Facebook, Samsung
Only commonality (in top 10) is Amazon and the Chinese internet companies Tencent & Alibaba
If you're nervous about US Tech, it's irrelevant, but it does give a degree of diversifiaction in the sector, and if you feel the largest threat is these mega companies being forced to split up, this could be helpful

Yeh this is one of the reasons i still own both SMT and PCT.

itwasntme001

BuildTheWall said:

itwasntme001 said:

BuildTheWall said:

itwasntme001 said:

Thrugelmir said:

itwasntme001 said:

BuildTheWall said:

itwasntme001 said:

It is why we got a tech sell-off at the start of 2018 because there was an inflation upside surprise (which itself caused a rise in interest rates) and it is partly why we got a sell-off at the end of 2018 as the FED was looking to move more hawkish (which was U-turned in 2019).

Markets seem to be expecting low inflation for a very long time and so it is not surprising growth/tech stocks have done so well. 

Tech stocks have very little correlation with inflation. Their revenues are dependant on other industries spending on technology, automation and advertising. Which in turn depends on global economic growth. 

A lot of these sell offs happen when global growth indicators indicate slowdown of some form or other. Real Interest rates have been moving quite a bit but have hardly crossed 2%. In fact Fed is signalling it is willing to allow even more inflation before raising rates - which again has no direct impact on tech stocks. 

Last I checked real interest rates were negative both in the UK (comfortably) and US for the 10 year term.

Reflects a fair degree of economic pessimism in some quarters. 

Yep and it looks like they will stay like that for some time.  Only way to reduce the debt burden.

Reduction of debt is a consequence of low rates, not a cause of low rates. 

No idea what you mean by this but lowering interest rates clearly helps to reduce the debt burden.

Interest rates are lower due to low inflation and the central bank wants to use this opportunity to pump liquidity and funding to the economy. 

Rates are not lowered to reduce government’s debt burden. The reduction of debt burden is therefore a consequence, not the primary aim for reducing rates. 

Never said it was the primary aim.  But certainly a aim.