Via RT Business

As hundreds of billions of dollars were wiped off the tech sector last week, the founder and chairman of the board of Research Affiliates, Rob Arnott, says there’s been a correction and the “tech bubble” is about to burst.

“We are clearly seeing a correction,” he said, pointing to the FANG+ stocks [Facebook, Amazon, Netflix, Google parent Alphabet, and Microsoft, among others] having recently taken a beating. “The FANG+ index was down 11 percent in just one-and-a-half days,” Arnott added, as quoted by the Financial News.

Last week, the tech-dominated Nasdaq Composite saw its worst decline since the period ending March 20 and its first drop after five consecutive gains. The US stock market was closed on Monday for the Labor Day holiday.

“It’s a bubble,” Arnott said. “Bubbles burst. The FANMAG [Facebook, Amazon, Netflix, Microsoft, Apple, and Google – Ed.] bubble will be no exception.”

Talking about Apple stock, which entered correction territory on Friday, with a decline of between 10 percent and 20 percent from a recent high, he said: “At its recent highs, Apple was worth more than the entire FTSE index. In other words, the one stock was worth more than the entire publicly traded British economy.”




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Arnott added: “It’s a fantastic company with great products and superb management. But it will not produce more profits for its shareholders in the decades ahead than the entire London stock exchange.” 

Earlier this month, he said that the lockdowns forced by the pandemic have fueled “asset bubbles” that will bring pain further down the line. “The big issues are the lockdowns and the resulting trillions in fiscal and monetary stimulus fueling asset bubbles. The lockdown has inflicted a human toll that dwarfs the damage of the virus,” he said.

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When asked whether the global economy is at risk of repeating the mistakes of the 2008 financial crisis, the fund manager said: “No, it’s much worse than that.”

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