- 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:
XLC: Likely Lower For Longer