What is HAPPENING? - Flip Flopping Tech

Today is another day for deep breathing and focus on the fundamentals of our investments. Tech stocks are taking another beating and we, unfortunately, are heavily invested in tech. There is, obviously, a reason for this. Taken individually, every one of our picks still seem to have been made on solid reasoning, with the possible exception of Verb, which disappointed on the purchase day and hasn't regained any value since.

Bumble, which I mentioned as one of my other holdings, is also languishing in the icebox, where it might stay for another year, or a week, though we do still feel generally confident it will surpass the price we bought it at.

So why is tech taking such a beating?

Not clear. 10-Year Bond Yields are up again, that's part of it. You remember what I told you about Treasury Bonds or T-bills, right? The U.S. Government guarantees they'll pay you double, but ten years later. Its slow, reliable money. Anybody can make money that way it if they have enough to start with, but if you want to make a lot of money, there are better choices. This means that the popularity of Treasury Bonds tells you how risky the market seems right now, because more people will buy T-bills if they're afraid their stock bets won't turn out right. Some people, for instance, will split their money into treasuries and stocks, so that, if the market does go bad, they've still got safe money growing.

The other factor that changes how many people are buying Treasury Bonds is...how many people are buying treasury bonds. Once they're purchased, the bond itself can be transferred, which means, if you have a T-bill, but you need money now, you could sell it for...$15,000 instead of the $20,000 it will eventually be worth. But that price changes just like everything else on the stock market, based on how many people are re-selling them and how many people are buying them (new or repackaged). So, when the price for a t-bill rises there are more people looking at that number and saying 'yes, I'd rather have my money there than in the risky market.' So all stock prices take on headwinds when bond rates are rising.

But bond yields don't explain why tech seems to be taking it harder than other sectors. Partly, the explanation seems to be that Tech just has more to give. All of the investor enthusiasm seems to be in one segment of the Tech sector or another right now, so that as broad investor sentiment bubbles down (higher bond yields are healthier for the economy, though the number of stocks traded, and maybe the movement of prices because of it, will be reduced) it seems as if the most wind is coming out of Tech sails.

What does that mean for our tech heavy portfolio, then? It means wait. We haven't lost the wind, we lost that lovely first gust we caught, and it may continue to be gusty, but we should expect to be taking two steps for every withdrawal.

We must let the food boil.