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Investing in growth stocks has become very challenging in September. The big, modern names in technology, along with all of the indexed investments and ETFs that track them, have all had some bigger down days. And the “buy now for future performance” argument is getting really tough to swallow, as valuation metrics for the big tech sector are very inflated.
The S&P 500 Index is, of course, significantly more tech weighted at 27.86%, so the big tech stocks are the driver for the index. And as a result, the index — even with the sell-off so far in September — still is at multi-year highs in terms of the value of the index’s members. Check out the price to earnings (P/E) at 25.76 times, the price to sales (P/S) at 2.44 times and the price to intrinsic value (book, P/B)