- Tech stocks' rally from mid-March lows is fueling concerns of another market bubble, but history shows the shares are fairly valued, James Paulsen, chief investment strategist at The Leuthold Group, said.
- Though tech companies now comprise roughly 27% of the S&P 500's market cap, their sales contribute to a greater share of nominal GDP than they did in the dot-com era, Paulsen said.
- While the early 2000s saw a "true bubble — where asset prices rose much faster than underlying fundamentals," today's tech names drive more economic growth and still aren't reaching past market weightings, he added.
- Tech stocks' market cap relative to economic contribution also shows stock prices sitting at levels seen after the dot-com bubble burst, the strategist found.
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Today's rallying tech stocks won't repeat the 2000 "tech-bubble" tumble because they aren't forming a true bubble at all, James Paulsen, chief investment strategist at The Leuthold Group, said.
The tech sector drove the bulk of the stock market's upswing from mid-March lows and now comprises roughly 27% of the S&P 500's market cap. Several analysts have highlighted the swelling concentration as a red flag for investors, forecasting a correction similar to that seen when the dot-com bubble burst.
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