Tech stocks go the way of the miniskirt as financial fashions change One of the oldest stockmarket indicators around is the skirt hem. When hemlines go up, so do markets. When hemlines go down, so do markets. It sounds silly, but, in truth, it isn’t really much more random than the more spreadsheet-based indicators that equity analysts pore over. You might as well chuck it into the mix if you are looking at everything else. Guess, then, what’s super fashionable at the moment? Yes, it is the midi skirt (worn with boots — which apparently solves the bare legs or tights dilemma you didn't know you had). I’m not a great one for fashion, but the falling hem has been so plastered over the fashion media that even I have just bought a pink pleated version. Bear that in mind, if you will, as we look at last week’s tech-stock wreck. Merryn Somerset Webb, Editor-in-chief, MoneyWeek @MerrynSW The Big Tech stocks that led the bull market of the past decade, including Facebook, Apple, Amazon, and Netflix, fell more than 23% from their highs, while Google’s parent, Alphabet, was down 18%. They were joined by much of the rest of the sector, and in a particularly dramatic fashion by the most techie of all tech investments, cryptocurrencies. For most of those, 20% is a distant dream. The weakest have lost over 90% of their value in the past 12 months and even the strongest, including the original bitcoin, have lost 70% or so. So what’s going on? Part of the answer is “nothing in particular”. It is not news that most cryptocurrencies aren’t much good for much. Yes, the underlying technology could eventually transform our clunky and expensive global payments systems and bring the world’s unbanked into the global financial system (hooray to both). But that does not give much value (if any at all) to the currencies themselves. They turn out to be cumbersome, unstable, and too open to both manipulation and boring arguments among insider developers and “miners”. It also is not news that the big tech companies aren’t actually a dream come true. They have had a wonderful time being the good guys in a low-interest rate, low-labour cost, low-regulation and nearly tax-free globalised world. And their embrace of all these things has been a main driver of the doubling of US profit margins in a decade. But labour costs are rising and the threat of heavy-handed and locally differentiated regulation, combined with nationally based taxation of revenue, is no longer just a threat now that national sovereignty is back in fashion. That means the likes of Facebook are most definitely not the good guys any more. Anyone who didn’t know all of this even last year simply hasn’t been concentrating. They might even still be wearing mini-skirts, for all I know. The other part of the answer is that over the past few years, everything has changed — not on a corporate level but on a global and macroeconomic level. Read the whole of this article on the MoneyWeek website.