When the price of gold and the relative price of technology stocks move closely together, as they have since 2018, this has historically indicated a higher overall stock market.
Great Commets Marianne! I think they ring true! I too see investors increasingly perceiving tech is a safe haven. And, you are correct, this positive correlation could go away quick if the Tech stars' EPS disappoint! Thanks for sharing your thoughts !
Thanks for sharing this interesting coincident relationship! I suspect there is one explanation:
Tech’s - software and now hardware - meteoric rise as driver of US stock market returns - is a reflection of quality factor in investing when the market is hit with massive shocks and uncertainties in the recent past 5 years. I would like to look at an important criteria of quality as large positive gap between ROE and cost of capital.
Market seems to look at tech as safe haven and tech stocks are often included in quality investing basket (ETFs).
Like you said, tech and gold are great diversifiers and AI and digital transformation have become a dominant theme in investing.
That may speak for the past 5 years but if tech stocks do not deliver the earnings growth baked into the price, I suspect gold may not fall with them and may hold up.
Great Commets Marianne! I think they ring true! I too see investors increasingly perceiving tech is a safe haven. And, you are correct, this positive correlation could go away quick if the Tech stars' EPS disappoint! Thanks for sharing your thoughts !
Thanks for sharing this interesting coincident relationship! I suspect there is one explanation:
Tech’s - software and now hardware - meteoric rise as driver of US stock market returns - is a reflection of quality factor in investing when the market is hit with massive shocks and uncertainties in the recent past 5 years. I would like to look at an important criteria of quality as large positive gap between ROE and cost of capital.
Market seems to look at tech as safe haven and tech stocks are often included in quality investing basket (ETFs).
Like you said, tech and gold are great diversifiers and AI and digital transformation have become a dominant theme in investing.
That may speak for the past 5 years but if tech stocks do not deliver the earnings growth baked into the price, I suspect gold may not fall with them and may hold up.