Alert iconWarning: Unsupported web browser

In View no longer supports your current web browser version, which means some functionality may be limited. Please update your browser for the best experience before you log in.

close icon
Citi Private Bank logo

Unsupported browser

Our website no longer supports your current web browser version, which means you are no longer able to access this website. Please update your browser to continue.

Investment strategy
May 16, 2021
3 mins

Does technology really have an inflation problem?

May 16, 2021
3 mins
David Bailin
Chief Investment Officer
Steven Wieting
Chief Investment Strategist and Chief Economist
 Electronic manufacturing factory design engineer in sterile overall holds microchip with gloves and examines it

Interest rates are likely to rise further when the full, new economic recovery gets underway across the world in the near future. However, the mere fact that rates will rise does not spell the end of the rise of technology in the economy or doom tech share performance.

  • A correction in the technology sector is underway. The ascent of value versus growth (mean reversion), the impact of higher rates on shares that must grow into their valuations, a glut of new equity including SPACs and retail investor dynamics suggest that further short-term weakness in areas like video gaming, telemedicine, and artificial intelligence is possible.
  • The NASDAQ rose 47% in 2020 partly on extrapolation of COVID’s powerful reallocation to technological solutions. The modest rise in interest rates has taken some steam out of the performance of growth shares.
  • Making a massive shift into a still highly valued, “cooling” tech sector is not our strategy. However, the large dislocation in “unstoppable trends” is beginning to create opportunities for investors.
  • With some of our unstoppable trends like healthcare technology and fintech down sharply from recent highs, we believe that preparing to leg into those areas will be a profitable strategy for long-term investors.
  • While investments in video conferencing or home electronics may slow for a period, we expect continued spending in cybersecurity, fintech, and hardware investment as far as the eye can see. Meanwhile, we are less concerned about big tech concentration as earnings largely justify such a large weight in passive indices.
If you are a Citi Private Bank client you can check the value of your portfolio by reviewing your monthly statements or, if you use Citi Private Bank In View, by navigating to the Account Overview page via Portfolio → Overview. If you have any queries please contact your usual Citi Private Bank representative.
Close Contact Form
Close Modal

You're about to leave the Citi Private Bank website

By clicking continue, you will visit a third-party website that is not owned or managed by us.

We have no control of the content, privacy or security beyond this point.


Stay on this page