The Tech Stocks Pose the Biggest Risk of a Stock Market Crash in 2019
Despite market cap success to the tune of a respective trillion dollars for Apple Inc. (Nasdaq: AAPL) and Amazon.com, Inc. (Nasdaq: AMZN), there’s a real risk of a major stock market crash.
Pundits reveled in Apple’s achievement, Amazon’s a little less enthusiastically – it was only the second company to hit $1.0 trillion. Still, Apple and Amazon stock’s valuations, implied the coverage, were great news for everyone.
But was it? Unless you happen to have invested in those companies years ago, there’s little to celebrate.
The stock market and equities started to dominate business and general news headlines around the mid-’90s. Since then, the media has touted companies and stocks achieving major milestones as something for everyone to use as an excuse for an on-the-spot dance.
Stock markets, admittedly, produce a contagious effect. A stock market crash is especially contagious.
Even those who don’t have an actual stake in the performance of this or that stock can engage in a share rally, or a crash for a bit of schadenfreude in a way that could only be compared to fans at game seven of the World Series. In stocks as in sports, especially when it comes to the fans, the first things that disappear are rationality and common sense.
How does this relate to Apple Inc. and Amazon.com, Inc. being worth $1.0 trillion each? Many investors will take this as a sign to keep pushing.
It’s a Tough Sell, but the Tech Stocks Pose a Threat
No doubt, the fact that the Dow Jones continues to close near 26,000 points, just 600 points or so shy of the record from January 2018, shows that many believe just that.
Apple and Amazon’s achievements have spread enthusiasm throughout Wall Street. Few have stopped to think that whatever the valuation, the market caps represent investors’ expectations about their future earnings–not the future earnings of all listed companies.
Thus, we can revel and admire how Tesla Inc (Nasdaq: TSLA ) stock, despite evidence of stock price manipulation, poor product quality, failed deadlines and production targets, and a CEO smoking a Cuban-cigar-sized joint during a live TV interview, remains in contention.
