Tech bifurcation favors equal-weight exposure
The advisors argued that extreme outperformance in semiconductors contrasted with software weakness makes cap-weighted tech highly vulnerable to a pullback, favoring equal-weighted tech exposure.
The argument
John Lodra pointed out that semiconductors rose 67% while software fell 20% over a six-month period, suggesting that historical tech surges of this magnitude often precede significant volatility. To manage this risk, the advisors favor holding tech via equal-weighted vehicles to avoid over-concentration in heavily weighted hyperscalers.
The thesis, stress-tested
✓ What validates it
- ✓Underperformance of cap-weighted tech ETFs relative to equal-weighted counterparts
- ✓A broader pullback in semiconductor stocks
▸ Risks discussed
- ▸Earnings reports from major hyperscalers could trigger high volatility
- ▸Historical precedents show steep pullbacks after rapid monthly gains
Hear it yourself
"It's it's a measure of two two standard deviations above this fifty day moving average. It's not a perfect science. It's just a a way to measure statistically, you know, a fairly extreme moves in a short period of time relative to some baseline, in this case, the fifty day moving average. So getting a little overbought, nothing too extreme. You can see most times in history, it it'll either walk up that moving average or or kinda stall out there. And so we're kind of in that area. Not not to be too concerned on the broad market, but, quite a dramatic shift in in things there. As I"
AFFILIATE LINK · ZORTIX MAY EARN A COMMISSION · NEVER A RECOMMENDATION TO TRADE