I saw an article that reported tech stocks lost $6 trillion in 2022.
My rough estimate is that the tech stocks lost 33% in 2022, so the current value of the tech stocks is $12 trillion. I am not able to verify this figure.I have this opinion.
Tech stocks were overvalued at the end of 2011. The price earning ratios of most of these stocks must be around 40 times. So, if the tech stocks dropped by 33%, the price earning ratio will, on average, be 26 times. This will still be too high.
The tech stocks did not lose its fundamental value. It lost a part of its bubble value. It is still overvalued.
The table below shows the largest tech stocks with a total market value of $8.8 trillion. The average PE ratio is 35 times.
If one looks at the high interest rate and a likely recession in 2023, the PE ratio is still too high.
The key point that I wish to make is this - we did not lose $6 trillion in market value in 2002 in the tech stocks. They were part of a bubble, and not the fundamental value of the stocks. The current market value is still too high. We may see a further drop in the market value, before it reaches its fundamental, long term value.
Tan Kin Lian
https://fisca.sg/ArticleDisplay.aspx?ID=1274
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