May 21, 2022

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Tech stocks are dropping sharply after more than a decade of explosive growth: — they could offer a painful lesson, says Jeff Bezos

Tech stocks are dropping sharply after more than a decade of explosive growth: — they could offer a painful lesson, says Jeff Bezos

The beginning of the year witnessed great turmoil in the stock markets. The war in Ukraine, impending fears of inflation and interest rates, and the energy crisis are just some of the keywords.

The final Friday of April came. The Nasdaq Technology Index on Wall Street where some of the world’s largest companies such as Apple, Microsoft and Amazon are listed had its worst month since the 2008 financial crisis.

The index fell more than 12 percent in April. In addition, the broad S&P 500 and the Dow Jones industrial average were down seven and four percent, respectively.

Thus, the values ​​of thousands of billions of dollars were erased from the global market.

‘Painful lessons’

Now, Jeff Bezos, one of the world’s richest men, goes so far as to suggest that a number of investors may face tough times ahead.

Most people have underestimated how great this “bullish” market can be. Such things are unstoppable…until they are unstoppable. Markets know. Bezos wrote on Twitter on Sunday evening Norwegian time could provide a painful lesson.

On Thursday, Amazon, the e-commerce giant of Bezos, disappointed the market for the first time in 15 years. The e-commerce giant incurred a loss in the billions – and its first quarterly deficit since 2015. The deficit was $3.8 billion, or about 36 billion crowns. The company also noted the lowest growth in any quarter since the dotcom bubble in 2001.

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The stake has fallen by more than 15 percent, evaporating $220 billion, or about 2,060 billion kronor, in one company’s market value.

Forbes listed Bezos as the third richest person in the world, surpassed only by Tesla founder Elon Musk and LVMH owner Bernard Arnault. According to the financial magazine, Bezos’ fortune is $150 billion, Bernard Arnault and his family’s fortune is $158 billion, and Musk’s is $246 billion.

Waiting for denial

Bezos’ latest comments came in response to a Twitter message from Bill Gurley. Gurley is a partner in venture capital firm Benchmark, known as one of the most experienced venture capital firms in the United States. Among other things, he is best known for investing in taxi company Uber in 2011, according to Forbes.

Gurley wrote in a letter:

An entire generation of tech entrepreneurs and investors built their entire perspective on valuation during the second half of this remarkable 13-year “bullish market movement.” The “learning process” can be painful, surprising, and disconcerting to many. I’m waiting for the rejection.”

Gurley points out how the biggest tech companies are priced way too high after what has been a “bullish” market for the past 13 years. In finance, the terms Bull and Bear are used as terms for whether one is pessimistic or optimistic on behalf of the stock, respectively.

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Sky high values

Berkshire Hathaway Group billionaire and billionaire Warren Buffett held its annual shareholder meeting this weekend, which is closely watched by financial enthusiasts around the world.

The investor myth has been vocal about what he thinks about the high values ​​of many of the companies that have sprung up during the pandemic, and he believes it has been increasingly difficult to find assets with the potential for significant returns, he writes. financial times.

“Wall Street makes money anyway, but it makes more money when people gamble instead of investing,” said the investor legend, adding that big US companies have become “poker chips” used to speculate in the market.

Sharing tips from Musk

On Sunday, Tesla founder and soon-to-be Twitter owner Elon Musk also signed up to offer advice in a market that has been extremely difficult to navigate so far this year.

Musk says he has received many requests for advice, writing:

“Buy shares in many companies that make products and services that *you* believe in. Only sell if you think their products and services have a worse trend than others.”

He further wrote that one should not panic when this happens in the market, concluding by saying “this will serve you well in the long run”.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.

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