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The Bitcoin Bust (Are Growth Stocks Next?)

As we have noted, the sell-off in investments has been broad based this year – with concerns over trade and interest rates pulling most assets – from bonds to stocks to oil, into negative territory for the year.

The sell-off has extended to two assets– crypto-currencies (think bitcoin) and high growth U.S. stocks – that for a time were viewed by some as impervious to setbacks and attractive regardless of valuation.

Bitcoin began the year trading at over $16,000 per bitcoin, as wild speculation at the end of 2017 drove it increasingly higher, with many purchasers assuming it would only go higher. Today, it traded for under $4,000, a drop of over 75% in less than a year.

Through the first half of 2018, the fastest growing large U.S. companies, many of which have very high price to earnings ratios, outperformed other U.S. stocks by close to 10%. Since then, these stocks, half of which are technology companies, a sector strongly impacted by the recent tariffs, have underperformed by over 10%. Investors in these stocks are now re-evaluating if the level of growth they assumed for these companies is justified and if not, if other more reasonably priced stocks are more attractive holdings.

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.

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