In Finance Avenue’s tech and crypto debate, the specialists pushed recession-proof technology stocks forward.
2022 was a painful stock market year for every investor, but the losses were even greater for the crypto enthusiast. The value of Bitcoin, for example, imploded by 60 percent this year. “The implosion of the stablecoin TerraUSD and its sister crypto luna in May of this year has caused a lot of problems,” says Levi Haegebaert of Start2Bitcoin. “This caused crypto companies to go bankrupt, which then dumped their bitcoin. It led to a downward spiral.’
Haegebaert remains a bitcoin believer. ‘I believe in the scarcity (maximum 21 million bitcoin) and I believe in the technology. The combination of both provides me with a positive vision of 5 and 10 years. Major crashes are common in the crypto world. By the way, we learn from statistics that two-thirds of bitcoin investors have not sold this year.”
Analyst Geert Smet of De Belegger is less convinced: ‘We have entered the crypto winter. There were certainly nice profits to be made in recent years, no one can deny that. But because of my aversion to hypes I stayed out. The crypto markets will not recover anytime soon. It’s normal that most investors haven’t sold after a 60 percent crash.’
Smet also pointed to the risk of limited supervision and regulation, as a result of which bitcoin investors on the bankrupt FTX have lost their money. Haegebaert adds: ‘FTX was headquartered in the Bahamas. That’s not a coincidence. A broker like Coinbase, for example, has much more regulations as an American listed company.’
FTX was headquartered in the Bahamas. That’s not a coincidence.
Quirien Lemey of the Genevan private bank DECALIA is not a bitcoin fan. “I was already negative about crypto five years ago. Then you should not have listened to me, because we are still much higher now. I do not think it is responsible to advise crypto as long as there is no more certainty about supervision and regulations.’
It was also a bad year for technology investors, with the US Nasdaq falling by a quarter. Lemey: ‘Higher interest rates mean lower valuations. Hence the stock market wisdom, don’t fight the Fed. We may now know ‘peak Fed’. This means that interest rates will not rise any more than is already factored into the prices of technology stocks. That offers hope.’
According to Geert Smet, US technology stocks may not have corrected enough yet. ‘Apple
trading at more than 20 times earnings. Apple used to be valued at 12 to 15 times earnings. While the economy may now be heading for a recession and consumers have less resources to buy the latest iPhone. So technology stocks can still do some things.’
Quirien Lemey recommends investing in companies that benefit from a secular trend, recession or not. ‘Companies are the last to save on IT security solutions. For example, we have Okta
in the fund, a specialist in identity management. Okta recently came up with strong results, as a result of which the share recently rebounded. But since the beginning of this year we are still 70 percent lower.’
Companies are the last to save on IT security solutions.
Smet recommends looking at payment specialist Paypal
. “The competition is getting tough. Smaller players are currently finding financing more difficult. The ecommerce market no longer has the growth figures of during corona, but a growth of approximately 8 percent remains good in these times.
The analyst of De Belegger also pushed the Leuven 3D printing specialist Materialise
forward. “The share price has dropped from 70 to 9 dollars as a result of the outflows from Cathie Wood’s fund. I think this now offers an opportunity. Moreover, Materialize is a profitable company and has a large cash position.’