Hedge fund managers and market watchers have been saying it for months. Tech stocks are done; it’s time to ditch the pricey momentum names in favor of value stocks. Unfortunately, it seems like every time we hear that the tech sector pauses ever so briefly before taking another leap even higher into the sky. So when will the markets really be ready to say goodbye to high-flying tech stocks?
We might finally be there. Maybe. Perhaps. We’ll just have to wait and see.
Investors unloaded equities last week
Bank of America Merrill Lynch strategists Jill Carey Hall and Savita Subramanian said in their “Equity Client Flow Trends” report this week that their firm’s clients were big sellers of stocks last week. The broad-based selling of single stocks followed a week of net buying.
Institutional clients led the equity sales. Private clients sold stocks for the ninth consecutive week, although last week they recorded the largest sales in about three months. However, hedge funds shifted from selling to buying after four weeks of selling.
Are tech stock sales finally here to stay?
The BAML team said clients sold stocks across all sectors, but the largest net sales were in tech stocks and consumer discretionary. Both sectors have been this year’s biggest winners so far, which suggests the big momentum names could finally be starting to slow down, if the trend holds, of course. Consumer discretionary sales reached the highest level in nearly two years. In fact, sales of discretionary stocks were at the fourth-highest level since BAML started keeping data in 2008.
Although discretionary and tech stocks were the most out of favor in terms of sales last week, the firm said the one sector that was “the most persistently negative” in terms of flow sentiment — based on sales over the last 12 weeks — was energy. The BAML team said institutional clients, private investors and hedge funds were all unloading energy stocks last week. In fact, energy was the only sector the firm’s clients sold throughout all of the third quarter.
