Why The Technology Sector Has Done So Well

Jul 26, 2021 | Investing

Vaccines were developed in just a matter of months. Karl Eggerss joined Trey Ware to discuss some of the reasons technology stocks have done so well and why they may continue to do so despite their high valuations.

Trey Ware:

All right, let’s go to Karl Eggerss, Creating Richer Lives.com. Karl is always here on Mondays to talk about Monday money and the stock market for the first time over 35,000. That’s pretty cool, Karl.

Karl Eggerss:

It’s weird, Trey. It’s like every time, every couple of weeks, we tend to get some news event or something that looks like, okay, people are going to start moving money to the sidelines where this market’s going to take a breather because it’s been pretty much straight up even for the last 12 months. And every time that it sells off, new money comes in to buy that dip.

Karl Eggerss:

And so, my podcast this week was titled 24 hour bear markets because that’s what it feels like. The market goes down and people buy it, and it was like, what happened? I mean, last Monday, you and I were talking. The Dow Jones was down 900 points, and Tuesday, Wednesday, Thursday, Friday, that got eliminated, and we went to new highs, as you said. So there still seems to be just too much money chasing this market.

Karl Eggerss:

And there’s a lot of good things going on. I think the rebound is slowing a little bit. The economic rebound is slowing, but people seem to be looking through this Delta variant a little bit and looking forward to an infrastructure deal, which is still up in the air. I mean, there’s a lot of things going on, but again, there’s just too much money chasing these stocks. And so the market continues to elevate up.

Trey Ware:

What’s hot right now?

Karl Eggerss:

Technology is still hot, believe it or not. I mean, we’ve talked about it over the last year. It made sense going into the pandemic that technology stocks would do very well because that’s what really got us through all of it. The online shopping and the Zoom meetings, and all of those things.

Karl Eggerss:

And we saw a little bit of rotation when the economy opened back up, people started going back to the airline stocks and kind of the reopening trade we’ll call it. And now you seem to be going back the other direction and maybe it is the Delta variant. People saying, you know what, what if? What if we had to do lock downs again?

Karl Eggerss:

I don’t think that’s primarily it. I think we just see a lot of technological innovation that is being pulled forward. We had a lot of really good things that happened technology-wise in the last 12 months that were going to happen anyways, but they’ve been pulled forward. And so a lot of people are rewarding those technology stocks.

Karl Eggerss:

But we’ve got a lot of earnings being released over the next week or so, especially in the technology sector. A lot of them are overpriced. A lot of them are very expensive, but that is what’s working right now.

Trey Ware:

I would think the market is overpriced, but man, every time, like you say, every time I think that, they build some more.

Trey Ware:

We know that Merck and we know that Pfizer have done very well with these vaccines. They’ve made a whole lot of money. Now there’s Shionogi who is also developing along with Pfizer and Merck a once a day pill to fight COVID-19. They’re not there yet. They’ve got it, but they have to go through all the testing phase and everything.

Trey Ware:

And that’s all three. Now, Shionogi is behind Pfizer and Merck on the once a day pill to fight COVID-19. But how do you think that’s going to play? These guys bust loose with a pill one day that could solve this issue?

Karl Eggerss:

Well, I mean. It’s good. I still look at all the other diseases and all the other things that we deal with and plenty of our listeners have all kinds of ailments they’ve been dealing with for literally decades, and there’s no solution for those. Yet with this, we come up with a solution in just a few months. It’s very interesting. I’ll leave it at that.

Karl Eggerss:

So I’m looking forward to more technological advances that help us live a little longer, that help us with our joint pain and people with osteoporosis and people with, you name it, rheumatoid arthritis. All kinds of diseases and stuff that we still have a lot to tackle. But the technology obviously has got momentum, but certainly it’s pretty amazing what operation warp speed did.

Trey Ware:

And a once a day pill would just be, I think it would be revolutionary to deal with this with popping a pill once a day and you’re getting better.

Trey Ware:

All right, Karl. Thank you, man. We’ll talk again next Monday. That’s Karl Eggerss, Creating Richer Lives.com. He’s here every Monday to talk about money and what’s going on.

 

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