Why tech stocks deserve to be trading on a premium

TECHNOLOGY

The Nasdaq suffered its worst day since 2011 this month, and even after the sell-off some valuations remain high. But Walter Price, manager of the RCM Technology trust, says the premium on many stocks is still justified.

The tech-heavy Nasdaq Composite peaked on 5 March, marking a stellar one-year increase of over 35% in dollar terms. In the weeks which have followed, the index has taken it on the chin and declined 8% to the S&P 500’s pull-back of 3%. The most impressive ascent and decent occurred within the high-growth areas of technology, such as consumer internet and cloud computing companies. The Nasdaq’s internet index rose over 62% through to 5 March, but has since given back nearly 17%. A good portion of high-growth tech’s pull back seems to have been triggered by valuation concerns. For severa...