DISCB - XLC: Likely Lower For Longer

• XLC is likely to underperform the broader market throughout the remainder of the 2020s.
• We break XLC down into three groups--software, entertainment, and telecoms--and analyze them one by one.
• Software and entertainment stocks are at unsustainable valuations; historically this has been corrected by decadal downturns.
• Software and entertainment stocks are also most vulnerable to both cyclical inflationary shocks and deflation, one of which is present now and the other possible in the near future.
• Telecoms are likely to prove more resilient, outperforming software and entertainment stocks over the remainder of the decade, but will still likely experience low returns.

For further details see: