2024-04-19 00:39:49 ET
Summary
- The Vanguard Information Technology ETF has underperformed cash since its 2021 peak, yet its valuation multiple has increased owing to portfolio rebalancing in favor of Nvidia and away from Apple.
- Extreme valuations, rising Treasury yields and corporate bond yields, and the break of the uptrend warn of another 38% decline as we saw following the 2021 peak.
- With a dividend yield of just 0.7%, a 10% RRR would mean VGT dividends would have to grow by 9.3% indefinitely.
- Highlighting the downside risks facing the ETF, an 8% long-term dividend growth rate would leave fair value 65% below current levels.
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For further details see:
VGT: This Is The Problem With Buying At Record Valuations