Higher Rates For Longer, A Clear Headwind For PNQI

Unlocking Alpha profile picture
Unlocking Alpha
761 Followers

Summary

  • In my last piece on PNQI, I discussed some of the dangers of investing in high-multiple stocks during a time when monetary policy is tightening.
  • Monetary policy is currently more restrictive than it was in June 2022, and the Fed has plainly eliminated any pivot scenarios in the near future.
  • Since policymakers are clearly indicating that they want to see lower equity prices, I believe it will be difficult for PNQI to reach a new all-time high soon.
  • Unless we see a pivot in monetary policy, I find PNQI's risk-reward profile unattractive, and I feel the prospects of retaking the June lows are high.

Global connection

piranka

Investment Thesis

In my last article on the Invesco NASDAQ Internet ETF (NASDAQ:PNQI), I pointed out some of the risks associated with investing in high-multiple stocks at a moment in the cycle when monetary policy turns restrictive. As

Morningstar

Morningstar

Refinitiv Eikon

Refinitiv Eikon

Refinitiv Eikon

Refinitiv Eikon

Factset

FactSet

YCHARTS

YCharts

Bloomberg

Bloomberg

Apricitas Economics

Apricitas Economics

This article was written by

Unlocking Alpha profile picture
761 Followers
About me: Value-oriented investor, seeking low-risk investments with the potential to deliver high returns. I like to analyze commodities, ETFs, and cash-flow positive businesses that have a moat and growth opportunities.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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