Displaying items by tag: tech

(New York)

The end of the exciting but short-lived Bitcoin era may be upon us. As everyone will know, the cryptocurrency surged this year by around 2000%, from $1,000 up to $20,000. However, after worries and threats of regulation, bitcoin has fallen back steeply and is now trading at around $10,000 or just half what it was a few weeks ago. One prominent fund manager commented on bitcoin that “Having no clear fundamental value and largely unregulated markets, coupled with a storyline conducive to delusions of grandeur, makes this more than anything we can find in the history books the very essence of a bubble”.

FINSUM: It is next to impossible to forecast what bitcoin will do, but it should be noted that the cryptocurrency has bounced back from 50% drops before in this big rally.

(San Francisco)

While most publications have been running stories arguing that it may be time to get out of the FAANGs, Barron’s has a run a piece to the contrary, saying that they have more room to run. While the piece admits that the group of stocks is under a lot of pressure and is highly priced, it contends that it is not time to pull out yet. The argument is that despite accusations of misbehavior and threats from Trump, the sector will remain the centerpiece for growth investors. If the economy continues to chug (meaning stay under 3% growth), then tech’s steady growth will remain attractive.

FINSUM: We tend to like this view. Despite how richly these companies are valued, we think there is still room for medium-term value growth as regulation is still a way off and their fundamental businesses are solid.

(New York)

For the last year there has been increasing public frustration with tech companies. Gone is the general perception of Silicon Valley being inherently good, replaced with an angry skepticism over data leaks, election manipulation, and automation. Now there is tangible change in the air amongst investors too. Jana Partners, along with Calstsrs, have just begged Apple to investigate the iPhone’s impact on kids, and it seems representative of a larger trend against the tech industry. There is also rumbling about regulation on the fringes, and increasing skepticism about the social impact of Amazon, in particular its effect on Main Street, jobs, and inflation (although the general public NEVER misses inflation).

FINSUM: We think there is a big change brewing for the tech industry, and that the next decade will likely be a lot more difficult than the last.

(New York)

Tech has been the undisputed leader of the rally over the last several months, but there might be cracks in its armor that investors need to be aware of. Internal price momentum has started to fade in the sector, and it looks as though it might be ready to hand over leadership of the market. According to one equity analyst, “Relative performance has diverged on the sector’s new high, while semiconductors and small caps have failed to confirm as well”.

FINSUM: No one wants to hear this, but with valuations so high, it might well be true. The other big risk is regulation, but given good business momentum in the sector, there could still be some room to run.

(San Francisco)

The risks of regulation on Silicon Valley are rising. Fake news and data leaks have raised the suspicion of media, consumers, and government, and just yesterday Apple’s shareholders called for an investigation into iPhone addiction and mental damage in children. Now, without even a day’s rest, there is a another major probe into Apple. This one is coming out of France and surrounds the allegation that Apple deliberately worsens performance in older phones. The company faces criminal charges for the behavior.

FINSUM: So this could go both ways. If France finds something, it could turn into a global PR nightmare that could really hurt the company. However, we are not sure how much information France will actually have access to, so it may turn out to be nothing.