Analysis

As Tech Valuations Soar, Eyes Turn to Interest Rates

Federal Reserve Chair Janet Yellen. Photo by Reuters/ Gary Cameron
Federal Reserve Chair Janet Yellen. Photo by Reuters/ Gary Cameron

It’s the economy, stupid.

Anyone following today’s technology boom should keep Bill Clinton’s 1992 campaign mantra in mind. Low interest rates are drastically inflating the value of companies both public and private, according to a growing chorus of investors and analysts, and an improvement in the global economy will almost certainly drive rates higher and bring valuations down.

The question then is not whether a big correction will come, but when.

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“The more subtle part is trying to take your foot off the gas – even slow down and possibly reverse – before the larger backdrop changes,” Lindzon wrote. “I have enjoyed this ride since 2009 and I don’t want to accelerate into a wall. The data I am putting together combined with my risk profile says to slow down.”

This story has been updated to include comments from the Federal Reserve.


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“I have enjoyed this ride since 2009 and I don’t want to accelerate into a wall."

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