Is There a Market Beyond Tech?

In a recently published paper, Not a Question of Either/Or: Secular Trends and Economic Recovery Present Opportunities for Stocks, Director of Research Matt Peron explores the outperformance of large-cap technology stocks in 2020. In this accompanying video, Mr. Peron discusses some of the highlights, arguing that while tech companies are backed by powerful secular tailwinds, many other companies are adapting to a digital-first economy and/or continue to have sound fundamentals.

Key Takeaways

  • So far, stocks of large-cap technology and Internet companies are leading the market in 2020, backed by powerful secular tailwinds that have gathered strength during the COVID-19 pandemic.
  • Many other stocks have underperformed, leading to depressed valuations. But we think some companies could be being unfairly discounted, including firms pivoting to an omnichannel business model.
  • Thus, while large-cap tech stocks may continue to outperform, we think the market could recognize a broader set of opportunities, especially as economic growth improves.