We are seeing interesting market dynamics play out today, the likes of which I do not recall ever having seen in the past. In other stock market crashes and recoveries, typically companies traded on the Dow Jones (more manufacturing and heavy industrial stocks that typically get beaten up to a greater degree in a panic) recover more sharply than technology stocks, which often take longer to recover due to these stocks’ lower reliance on economic stimulus to regain lost ground.
That said, technology stocks have continued to maintain their outperformance to the broader stock market as investors have viewed the growth profiles of large cap blue chip tech names like Apple Inc. (NASDAQ:AAPL) as superior to more defensive companies in economically sensitive sectors more prone to a rebound post-recession. We are still in the early days of seeing how this pandemic will ultimately affect stocks, so more pain could be on the horizon, however, it appears tech leadership is here to stay.
Apple is a world class stock I have beaten my chest about in recent years and do believe it is worthy of the valuation the market is placing on the company today. That said, I do see significant uncertainty with respect to earnings on the horizon, so I would advise caution before putting too many of one’s eggs in any basket, no matter how good. The fact that everyone seems to want to flock to Apple as a core holding is indicative of its tremendous long-term potential, so stay invested if you are on the fence and have a position.
Invest wisely, my friends.
