The anchor of asset pricing danced, and the bubble bursting of US stock technology stocks was everywhere

U.S. tech stocks, which many investors consider a bubble, have been falling sharply lately. The high-growth stocks that have benefited the most from historically low interest rates are now hit the hardest by expectations of tightening monetary policy by central banks around the world. Heading into 2022, the Nasdaq Composite Index, which is dominated by technology and growth stocks, has fallen the most, and the index has fallen 9.7% from its Nov. 19 high.

According to the January global market survey released by Deutsche Bank, 49% of respondents believe that US technology stocks are in a bubble, 39% do not think so, and 12% say they are unclear.

Bank of America's January global fund manager survey showed that the net allocation of technology stocks fell 20 percent from the previous month to 1 percent, the lowest level since 2008.

However, it has been difficult to correctly identify an asset price bubble or determine the timing of its collapse. U.S. tech stocks were considered one of the most frothy assets in a Deutsche Bank survey last March, but the price of tech stocks has continued to rise since then.

However, the recent stock market decline comes amid growing widespread belief that the Fed is preparing to start raising interest rates and curtailing the unprecedented accommodative monetary policy that helped the stock market soar during the pandemic.

Julie Biel, portfolio manager and senior research analyst at Kayne Anderson Rudnick, said, "The rise in interest rates will continue and everyone's decisions must take this into account – not just those who borrow, but mainly valuation factors." "As a result, those super-high narrative-driven tech stocks will continue to take a hit."

Seema Shah, chief strategist at Principal Global Investors, said the recent surge in bond yields had caused "collateral damage" to tech stocks. Looking ahead, she believes unprofitable tech companies will face the greatest pain, and said companies with strong balance sheets and pricing power will have room for further growth.