2. A closer look at the technology sector. The technology sector is still a very heavy component of the Nasdaq, though less so today than 13 years ago, as Matt Krantz of USA Today and Barry Ritholtz recently pointed out, and it doesn’t look expensive. The sector is currently trading at around 17x earnings—roughly in line with the broader market and much less than the 67x earnings we saw in 1999. In fact, it’s one of the sectors I currently like.
So, simply put, while some areas of the market are looking frothy (including U.S. small-cap stocks and social media companies), today isn’t 1999 and we feel stocks aren’t in a broad market bubble.
Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock and iShares Chief Global Investment Strategist. He is a regular contributor to The Blog and you can find more of his posts here.
Source: Weekly Commentary, Bloomberg