Growth stocks, especially tech stocks which has not shown bottom line growth got hit badly. On the other hand, value stocks continue to hit new high as
... I wrote in my previous post that a stock market correction is imminent, just that I didn’t expect it to happen just right after I published my Portfolio Update. Seems like all eyes are on TLT – iShares 20 Plus Year Treasury Bond ETF now. The bond yield has been steadily rising since Aug 2020 but only started making waves recently. As trust in Covid 19 vaccines are growing, investors in general are betting on an economic recovery and setting expectations on higher inflation rate to come. That means they are expecting higher yield to compensate inflation risk. Higher treasury yield means higher risk-free rate, and that reduces the intrinsic value of growth companies when we apply DCF formula to value stocks.
