The potential for cutting-edge technology stocks to deliver exponential returns often leads investors astray, tempting them with the glamour of ownership to such a degree that any sense of valuation goes out the window.
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This instinctual phenomenon, known in behavioral finance as herd mentality, can lead to unsustainable run-ups in valuation, where a company far outshoots its given technology’s tailwind, well beyond what its income statements can substantiate, opening investors up to steep losses once the company fails to keep up with expectations.
To avoid this outcome and populate their watchlists with an optimized candidate mix, it stands to reason that investors should keep blind belief at bay through a focus on fundamentals,…
