Spencer Jakab
speaker
981 appearances
14 recordings
1 series
first heard Jul 2017
last heard Jun 2021
Spencer Jakab’s voice in public audio — every appearance, attributed to the second.
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Appearances
And then tech companies are a bit different.
Tech companies, the reason that they might do badly is that eventually you would have an uptick in long-term rates.
And those companies tend to be the most sensitive of the entire market to higher long-term rates.
When you have expectations of rising rates, when you've had it over the past several years,
Those companies have sold off the most sharply because their eventual payoff in terms of cash flows are the most distant.
You have a lot of tech companies that barely make money, don't make money, yet have very high multiples.
And so those might take a tumble.
But one sector...
That's traditionally a safe haven and would be today, maybe even more so today, would be natural resources where you have things that are coming out of the ground like lumber and metals and oil and gas where inflation tends to have a very good impact on them.
Those stocks tend to outperform the market really handsomely almost always during periods of high inflation.
So financials are an interesting case because if you're an individual and you have a lot of money borrowed, you might be happy about inflation.
If you've lent a lot of money, if you have a lot of assets, then you're not happy about it.
And banks are both.
Banks both borrow and lend.
But basically, they have a base of equity to support that.
And that equity isn't something like office buildings or hard assets.
It's
it's cash, it's financial equity.
And so they actually would suffer.
They would suffer because rates rise and that tends to hurt them in the short run.
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