Unplug, unwind and de-stress.
That mantra is one tech investors might need to hear if they’ve been following the news of late. Particularly if they’ve been exposed to the incessant headlines shrieking about the failures of our once-trusted tech juggernauts.
First came the tragic Tesla car crash, where a fatal error in self-driving technology resulted in the death of a driver, Apple software engineer Wei Huang. This was another setback for Tesla, who, much to disappointment of investors, failed to meet their first-quarter targets for production of their Model 3 electric vehicle.
Then a week later came US President Donald Trump’s Twitter attack on ecommerce company Amazon. In a series of five tweets, Trump admonished Amazon for destroying the US Post Office’s business and receiving unfair subsidies.
In a recent tweet he wrote:
‘I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!’
Trump’s fervent attack is likely motivated by the fact that Amazon’s CEO, Jeff Bezos, also owns The Washington Post — a publication that is often critical of Trump’s antics and style of government. Nevertheless, Amazon’s share price shrivelled up in response to the tweets, and is now trading at $1,400 per share down from $1,600.
Then came, as I’m sure we’ve all heard, the Facebook scandal. The data theft debacle that left Facebook and its investors floundering amidst global outrage and a #DeleteFacebook Twitter movement that is still ongoing.
These devastating blows have left the tech sector battered and bruised. And now the markets are keeling over as investors watch in dismay.
This week, Tesla, Amazon and Netflix have all reported losses exceeding 5.1%. And the New York Stock Exchange’s FAANG index, which includes Facebook, Amazon, Netflix and Google, plummeted by 4.1%.
The tech-heavy Nasdaq index also dropped by 3.9%, indicating a broader market correction that has investors concerned.
The plot thickens…
Meanwhile, the new information pouring in on the Cambridge Analytica scandal isn’t helping things one bit.
The Cambridge/Facebook scandal, which I covered back in March, initially reported that 50 million users had their data collected and exploited for targeted political advertising.
But as of this week, that figure has now been amended to estimate that more than 87 million users had their data improperly shared. This included 300,000, or 0.4%, of Australians.
These scandals have ignited a public outcry and has consumers questioning whether the intentions of these all-powerful technology companies are always benevolent.
And with growing scepticism about the future role tech companies should play in our society, things could get a lot worse from here.
Many experts are predicting the market mania surrounding tech stocks is coming to an end, or at least, a correction. As David Marsh, the managing director of the Official Monetary and Financial Institutions Forum predicts:
‘It’s quite clear that some of these tech stocks got to stratospheric levels not justified by real life, and therefore whether it’s Mr. Trump or worry about some vehicle going off the road and killing people, there are lots of very justifiable reasons I think to sell. I think the correction has only just started.’
Could this mark the beginning of the end for the tech sector’s bull market? After all, this is the sliding confidence and crashing prices that foreshadowed the dotcom bust of 2001. And with the reputation of leading tech companies lying in tatters, optimism about the future is understandably low.
In the wake of these discouraging few weeks, now is the time to reconsider our attachment to the digital world. As internet users and investors, it’s always valuable to take some time away from the flashing screens and turbulent charts in order to return to the markets refreshed and astute.
Market expert Vern Gowdie believes it is possible to free yourself financially and personally from major tech corporations and the banks. And for the sake of your wealth, it is often wise to do so. To learn how to stay ahead of heard and dodge failing tech investments, you can read his book The End of Australia, here.
This week in Markets and Money
Opioid addiction in the US is an epidemic that isn’t covered much in the media. But it has become so severe that Donald Trump has declared it a national health emergency. Funnily enough however, states who have legalised medical marijuana have a lower opioid-linked death rate. As people who suffer from chronic pain are using marijuana to treat it. And as Selva wrote on Tuesday, the trend of legalisation that we’re seeing globally has marijuana set to become a multimillion dollar industry.
To learn how to take advantage of this trend, click here.
In the midst of talk of a trade war between the US and China, economists and investors are playing a guessing game. How likely is it? And what will the consequences be? As the two nations play a tariff tug of war, we can only wait and see how serious the economic outcome will be. And as Selva warned on Wednesday, if tensions keep escalating, Australia could be hit hard.
To read the full story, click here.
On Thursday, Selva brought bitcoin into the spotlight again. Even though bitcoin is trading at a significantly lower price than it was last year, from its debut in 2009, it has expanded by leaps and bounds. And as tech companies are working on new crypto regulation, this could greatly improve bitcoin’s legitimacy. And it could mark the beginning of bitcoin’s mainstream adoption.
To learn more, click here.
Then on Friday, Selva forewarned us about the dangers of living in a cashless society. With the risk of hacking higher than ever, and the potential for technology failure always present, there may come a time when you aren’t able to access your wealth. And while a cashless society is good for the bank’s monetary policy and convenient for us as consumers, the threat to your financial security is very real.
To learn how to protect yourself, click here.
Until next week,
Editor, Markets & Money