Long duration stocks
May 16, 2022
Technology stocks are so-called long duration stocks as they generate most of their cash-flows in the distant future. Independently of how promising, disruptive or innovative their technological franchise may be, they are most sensitive to any increase of interest rates: as the discount rate increases the prevent value of these cash-flows goes down. With central banks tightening and the 10 year Treasury at 2.9%, it is not a surprise tech is one of the most affected parts of the stock market selling. Boring value is back in fashion.