Tom Ognar isn’t used to having to explain his big bet on tech stocks like this.
After all, the portfolio manager of the $4.5 billion Wells Fargo Growth Fund beat 93 percent of peers over the past year by piling into Amazon.com Inc. and Google’s parent Alphabet Inc. But between Facebook Inc.’s privacy scandal and the back-to-back fatal crashes at Uber Technologies Inc. and Tesla Inc., the tech-sector doubters are suddenly speaking out as one stock after another slides.
Ognar is unmoved: “We don’t think the party is over.” Nor do the bulk of his fund-manager peers, as it turns out. Behind the ugly headline losses -- including the FANG complex’s worst-ever day on Tuesday -- there are data points that suggest that many funds are a long way from abandoning the industry that has added more to the wealth of U.S. stock investors over the past five years than any other. What’s more, the Nasdaq 100 Index is actually the only major U.S. stock benchmark still in the green this quarter.
“Think of things like your thermostat that used to be pretty basic and analogue. Now you can control them with your phone,” said Ognar from his office in San Francisco. “Your coffee machine, your coffee maker -- it’s a huge secular shift that hopefully will continue to put up sustainable growth.”
The stance on Wall Street strikes a discordant note with the backlash building in Washington. While it’s too early to say whether Facebook’s woes will lead to meaningful losses in users and advertisers, the drumbeat for tighter regulation has some wondering if it’s a watershed moment for an industry that promised to change the world for the better.
“You have the darlings of growth stocks that are going through some tough times, and it’s not going to be a short and quick story,” said Jennifer Ellison, a principal of San Francisco-based Bingham, Osborn & Scarborough, which manages $4.2 billion. “This is a tip of that iceberg.”
Even Amazon, largely shielded until now, was hammered on Wednesday by talk of a tougher government stance. Axios reported that U.S. President Donald Trump is contemplating ways to “go after” the e-commerce giant, including whether to wield tax or antitrust legislation.
Trump features again when it comes to Apple Inc. shares, which are more than 8 percent off their record high partly on concerns about the prospect of a trade war between the U.S. and China. In a worst-case scenario, the U.S. could impose a tariff that affects iPhones and other Chinese-manufactured electronics. And car accidents have roiled market darlings Tesla Inc. and Nvidia Corp.
Not to worry, say analysts, who’ve flooded email inboxes with reports reaffirming a bullish stance on the broader industry. The bull case? Tech fundamentals remain strong and, for all the worry over privacy, fake news and tech power, the U.S. giants are still cranking out products that people want to buy.
Facebook is sitting on a pile of cash so big that fines equaling the largest corporate penalties ever would amount to less than 7 percent of it. Alongside Google, its online dominance is so complete that there are few alternatives for users or advertisers.