In the last 12 months, technology stocks have been an important part of many portfolios. Analysts expect that tech stocks will experience volatility due to rising Treasury yields, and tightening of the monetary policy in the short term. Democrats will likely end generous tax breaks for investing in startups. Given this backdrop, we think it is best to avoid fundamentally weak—yet pricey—tech stocks Affirm Holdings (AFRM) and Farfetch (NYSE:). Keep reading. Technologies companies flourished in the worst COVID-19 crisis. However, rising Treasury yields as well as the potential for monetary tightening earlier than planned could lead to tech stock prices falling in the short term. Tech stocks are a staple in Wall Street portfolios, so investors may have concerns about their vulnerability to market swings.

Democrats also want to pay for their $3.5 trillion Build Back Better expenditure proposal. This would include limiting the tax relief that tech startup investors get when they invest in startups. The bill, if passed could reduce the exemption for capital gains of 100%. In addition, many tech companies are experiencing production delays due to long-standing shortages of semiconductor chips and other components.

We believe it is reasonable to steer clear of fundamentally poor and highly valued tech stocks Farfetch Limited, Inc. (FTCH) given this grim backdrop.

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