Source: Radio New Zealand
Some are warning that an AI fall could bring a share price collapse to tech stocks. AFP / Joel Saget
Share markets have had a volatile year but are on track to end significantly stronger than they began.
While the NZX50 has lifted less than 5 percent over the past year, the S&P50 was this week up about 14 percent. The Nasdaq was up 20 percent. Some individual companies have seen significant share price growth – Nvidia is up 36 percent and Rocket Lab 150 percent.
With some warning that an AI fall could bring a share price collapse to tech stocks, that has some investors wondering whether they should sell their shares.
RNZ asked some experts, who say it depends a lot on your individual circumstances.
Mike Taylor, founder of Pie Funds, said investors should not adjust their long-term asset allocations because AI stocks had had a good year.
“However, if investors are overly exposed to AI, and volatile names, which I know a number of retail investors are, with perhaps their whole portfolio consisting of just Nvidia and RocketLab, they might want to consider taking some chips off the table, yes.
“And deploying that into parts of the market which look undervalued. It’s also worth noting the NZX is only up 3.5 percent year-to-date, and the ASX is 5 percent, meaning that local markets haven’t really participated in the AI boom, with the except of the odd holding in Australia.”
Rupert Carlyon, founder of Koura Wealth, said investors should always take a view on what fair value is. “At that level you should be selling your holding. If you don’t think there is [an] upside then you should be selling. If you think it is still cheap then you should be buying more shares.
“Secondly – you need to be conscious of how much exposure you have to a single name. If a stock does really well and all of a sudden makes up 20 percent of your portfolio it is probably prudent to sell some of it to realise the profits and rediversify your portfolio. You need to be constantly looking at your portfolio to ensure it is not too [exposed] to a single name – because if it falls you will unwind all of your gains.”
Dean Anderson, founder of Kernel, said he had seen growth in investors looking to invest in US listed shares.
“You know, it’s the big names and companies that we know that are buying ETFs from big brands like Vanguard. But there’s also the local support for the uniquely from New Zealand, the local support for Rocket Lab.
“I don’t think people are selling. And obviously, if they do, they need to be really conscious that they don’t start to trigger themselves into being subject to capital gains tax.
“The mentality still seems to be is that many, if anything, they are buying the dip mentality and don’t mind that it’s down and still thinking long term. We’ve seen no slowdown in volume growth and no real change in the selections either of what people are buying. We’re seeing maybe a little bit more of things like Berkshire Hathaway, which tends to pop up more in conversations around these times… because it’s sort of the contrarian value type investor and an asset and sitting on a large amount of cash.
“I wonder whether there is sort of, you know, potentially there’s a reflection of that mindset going, I may want to have a little bit less of the AI growth exposure and I wouldn’t mind a bit more traditional value and sort of that Warren Buffett mindset, sitting on a large amount of cash and maybe sort of biding his time.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
