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That’s why tech stocks are attractive to investors again

Big tech company logos

Technology companies are growing faster. They generate the highest profits. But the shares are overvalued. Statements one and two remain true, statement three no longer. That should make investors sit up and take notice.

Technology stocks on what is by far the world’s most important stock exchange, the American Nasdaq, have lost 33 percent since their price high at the end of November. The industry is thus in a pronounced bear market. This is what investors call a prolonged phase of downward prices.

In fact, no other sector has lost as much over the past few months as long-running tech stocks — including Amazon, Facebook, Netflix, and Tesla. The concern about further rising interest rates weighs on the entire stock market. Conventional stock market indices such as the Dax and Dow Jones have also lost sharply since the beginning of the year.

But in technology, the need for capital is highest given large growth plans and high debt financing needs. Accordingly, companies and their shares suffer more from rising interest rates than others.

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