In the financial markets, the biggest winners from the crisis so far have – without a doubt – been the technology sectors. Software, hardware, ecommerce and related sectors have outperformed in the immediate aftermath (as we discussed in a recent strategy note). They also seem likely to benefit from some of the likely long-lasting changes to society that the crisis will forge. This is the latest episode in a long period of outperformance. Looking back over the past decade, technology-related companies have tended to perform like consumer staples or defensives on the downside, and like high growth discretionary stocks on the upside: an ideal combination from the investor’s point of view. But will this continue, and can it? In this piece we consider why technology-related stocks and sectors have been so successful and the dangers which could bring their run to an end.
