Last October and November, ETF PM reported that we expect a tech mega bubble ahead. This year, technology is a leading market trend again and semiconductors continue to outperform.
Here are some reasons why we are preparing our clients for a tech mega bubble:
- – Tax cuts may unleash $2.5 trillion in buybacks, dividends and M&A this year.
- – Buffett shifted to technology.
- – Softbank CEO, Masayoshi Son, expects machines to reach IQs of 10,000.
- – Leveraged risk parity enables greater exposure to risk assets in general.
- – Leveraged ETFs are leading growth investments.
- – Goldman doesn’t see a tech bubble yet.
Still, volatility in technology stocks should be expected, the AI bubble peak will arrive eventually, and there will probably be a difficult adjustment period or market crash to follow at some point.
At ETF PM, we launched Income and Tech 3x (IT 3x) last June, followed by new absolute return strategies that currently favor technology and semiconductors. However, we strongly recommend that investors employ strict risk controls when allocating funds to aggressive growth investments.
Contact us to learn more.
Cash-rich companies are set to pour $2.5 trillion into buybacks, dividends and M&A this year
- Companies are expected to push $2.5 trillion of “flow” into the economy this year in the form of share buybacks, dividends and M&A, according to UBS.
- The moves should help boost a stock market that has been stuck in neutral for much of the year.
- Buybacks have skewed toward tech stocks, which have easily outperformed the rest of the market.
- May set a record for share repurchases, and the month was the best for stocks since January and the best May since 2009.
Jeff Cox, 6/4/18
Money is pouring into the U.S. economy and in turn helping provide support for the otherwise struggling stock market.
If current conditions persist, corporations are likely this year to inject more than $2.5 trillion into what UBS strategists term “flow” — the combination of share buybacks, dividends, and mergers and acquisitions activity.
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