The president of Wall Street firm Yardeni Research indicates that he has little confidence in the American tech giants. Then of course it concerns the Magnificent Seven: Microsoft, Nvidia, Apple, Meta, Amazon, Tesla and Alphabet (Google). Speaking to CNBC, Ed Yardeni says these stocks are “slightly overvalued.”
Why are the tech giants overvalued?
“We have reached a point where information technology and communications services in the S&P 500 represent approximately 45 percent of the total market value, making the stock market index extremely concentrated.
If the Magnificent Seven continues to be successful, they should manage to generate sales among the S&P 493, the other companies in the index,” said Ed Yardeni.
This means that Yardeni is no longer “overweight” in the American tech giants for the first time in 15 years. That is, these stocks are no longer the center of gravity of their portfolio.
Furthermore, Ed Yardeni sees that the tech giants are increasingly starting to compete with each other. Where they previously had independent markets and each dominated in their field, they are now increasingly starting to come into each other’s way.
Instead of the tech giants, Yardeni now advises investing in financials, industrial companies, healthcare and foreign shares.
What does this mean for the Bitcoin price?
This could also have consequences for Bitcoin. The digital coin generally has a high correlation with the Nasdaq. That is the American tech fair. And a high correlation means that the prices generally move fairly synchronously with each other.
If the tech stock market takes a hit, it could affect the entire risk sentiment in the financial markets. Investors will probably take a step back and adopt a more defensive attitude, and this may also be at the expense of Bitcoin.
In principle, Bitcoin is a financial asset that mainly performs when the risk appetite among investors is high. If people dare to take risks and things are going well on the financial market, then the Bitcoin price will also do well.
Does stress strike and confidence decreases? Then Bitcoin is often the first to feel the pain.
Source: https://newsbit.nl/ed-yardeni-waarschuwt-amerikaanse-techreuzen-overgewaardeerd-enorme-crash-aanstaande/
