Technology was the winner. Nine actions that could be taken into account in the correction.

However, many funds and individual investors still favor technology. This isn’t necessarily a risk in itself since the Magnificent Seven and other tech stocks don’t necessarily move at the same pace, but it has tested some nerves: putting aside concerns about a bubble, there is so much capital already in stocks that there may be less. he stays to buy possible breaks or dips, which seem inevitable given the meteoric rises of some stocks.

Even those who buy and hold may need a strong stomach. As Adam Parker, founder of TriVariate Research, points out, high-quality growth stocks – a staple of long-term investors – are now subject to much greater volatility than their counterparts.

“Over time, the market capitalization of the technology sector belonging to the high-quality growth cohort has steadily increased to almost half of the total,” he writes. “As the performance of high-quality growth stocks has worked, the risk now increases… because the beta of high-quality growth technology stocks is 40% higher than the beta of high-quality growth stocks in other sectors. »

Beta is a measure of volatility relative to an index; a stock with a beta greater than 1.0 is likely to be more volatile than the overall market, while a value below 1.0 indicates it should be less volatile.

According to Parker’s calculations, some $10 trillion in market capitalization now has a beta of 1.2 or higher; The technology sector accounts for half of the total market capitalization of the top 3,000 U.S. stocks with a beta of 1.2 or higher.

“As a result, we have more market share than ever in high-beta, high-quality technology growth stocks,” he notes. “To the extent there is a market correction…high-quality growth technology stocks that have a high beta and could be particularly vulnerable to a significant correction.”

It highlights nine tech stocks with betas above 2.0 that could underperform the market in a correction: Palantir Technologies
,

UiPath
,

Rambus
,

GitLab
,

Shopify
,

Monolithic electrical systems
,

Teradyne
,

Towards innovation
,

and Duolingo
.

Of course, with the market rebounding from April’s decline, any correction might be far from possible, and even when it does come, it might be brief. Still, for investors whose pain tolerance has diminished during the bull run, it might be worth remembering that stocks that have moved higher can also perform well on the downside.

Write to Teresa Rivas at [email protected]