“I did trip off a lot of gains, which gave me a reason to sell those stocks,” he says. “But more importantly, I didn’t think fundamentally that I should stay in those names. I believe the sector is going to remain out of favour for an extended period of time.”
The struggles in the tech sector this year have been well-reported through headlines around missed earnings, mass layoffs, and public apologies from CEOs of once high-flying firms. Despite the dour mood around technology, some are standing by the space, believing that today’s beaten-down prices may represent bargain opportunities for the future.
But the world is set to enter an era of higher inflation, and rising interest rates are taking a bite out of the future earnings of growth firms. Against that backdrop, Klein thinks the days of mega-cap tech leadership in the stock market may be numbered, and that there’s still a lot of excess money to be squeezed from some of the largest tech names.
“I think the baton has to be passed on. It’s a value environment, but I don’t know if the world’s positioned for value just yet,” he says. “I think money is rotating, so I’m positioning my portfolio for more of a value-oriented tilt.”
Just as there’s no perfect way to time a market bottom, Klein expects the decline of tech will not be straightforward. He recalls how the NASDAQ declined from its March 2000 peak for several months, then went through a relief rally only to later descend even further.