John Manley, a chief US equity strategist for Wells Fargo Funds, spoke to Business Insider on July 11, 2017, where he gave his take on one of the most hotly-contested debates in markets: whether tech stocks are overvalued. Following is a transcript of the video.
Joe Ciolli: So we’ve covered really one of the big stories in the market, but we can’t really have a discussion about stocks with that talking about tech. It’s really been, sort of the lightning-rod sector of the last several months, if not since the election. I wanted to see what your thoughts were on that? We’re seeing a lot of price swings, the NASDAQ moving 1% or 2% on a day when the S&P is barely changed. It seems like it’s sort of a flashpoint for sentiment right now. Where do you come out on that? Do you believe in maybe some of the scepticism we’re seeing? Or it is a sector that you favour?
John Manley: Yes, yes, yes. In other words: I think it’s overvalued. But real growth stocks are almost always overvalued. The trick is when a growth stock, that’s truly a growth stock goes down solely because of valuation, when the fundamentals don’t get tripped up, that’s almost always a buying opportunity. I’m — no one else is really going to call those things exactly. But when they happen — as they have — usually it’s like falling down an up escalator. You may be tumbling down, but the escalator is pulling you higher. The earnings are pulling you higher as the price gets lower. Well, take 10% or 15% off of stock price, raise earnings 10% or 15%, and suddenly you’ve corrected a lot of the excesses we were worried about.
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