The best bet for the 2020s is short tech, long commodities

Author: Ruchir Sharma
Source: Financial Times

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Silicon Valley manias tend to lose steam when investors realise they have been pouring money into unprofitable ideas

In a telling sign, tech is the worst performing group in the stock markets this year; the best is old fashioned physical commodities such as metals and energy. Many commentators attribute these moves to rising interest rates, which tend to hurt growth stocks such as tech and help value stocks such as commodities, now magnified by fear that war in Ukraine will disrupt supplies.

But something more fundamental, long predating the Russian march on Kyiv, is going on. Historically, tech and commodities follow opposite cycles. When one booms for a decade, the other languishes. The previous big turn came in 2001 and now we are probably in the midst of another.

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