While the price of tech stocks is high relative to historical valuations, it’s not the only reason. The overall increase in equity valuations has contributed to this. The S&P 500 index is trading at three times trailing sales, or almost triple what it did a decade ago. Furthermore, the price-to-earnings ratio is up to twenty-one times the company’s projected growth rate for the next year.
While technology stocks may seem expensive to professional investors, they are still a good buy for those seeking income growth. The reason for the high valuations is because of the low interest rates. Because the yields on these high-fliers are so high, investors are willing to pay a high price for them. This makes them even more attractive as they lose their cheap money. As long as you don’t invest in the tech sector based on this storyline, it won’t be too long before you’ll see a significant return.
Despite the soaring prices, technology stocks have been undervalued for years. This has led many investors to ask, “Why do you think technology stocks are overvalued now?” The answer to this question is that investors have been luring new money into the market. The high yields on technology stocks have made many investors more willing to make big bets on this sector. So what’s driving the price of tech stocks? Click here blogradiovn.com to get top news all over the world and you can also check out this site rdxnet.biz for getting more info.