This Latest Tech Wreck Doesn’t Change the Secular Growth Story

(Bloomberg) --

The selloff in high-flying technology stocks continued this week after a breathtaking rally over the previous five months. Is the bubbling bursting, or is this just a minor setback for the perennial darlings of the market?  

Seema Shah, chief strategist at Principal Global Investors in London, joins this week’s “What Goes Up” podcast to discuss this and other important issues for the stock market. Some highlights of the conversation are below:  

“I think there is still froth in the market. But ultimately, if there's a really strong secular growth story, I don't think that you're going to see significant drops from here. Chances are that you're not going to see that magnitude of increases, certainly that we've seen over the last six months, that's not going to be repeated. But do we expect the market to come tumbling down from here? I'm certainly not a buyer of that idea. And the reason is that we may have increased our reliance, and we may pull back some of that dependence, on technology. But a fundamental core of that is here to stay. And also in an environment where there is so much uncertainty, we still don't know what's around the corner, you still need companies that have got those really strong balance sheets and positive cash flow. And those mega-cap tech stocks meet that criteria.”

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