Home ยป Waning ‘tech wreck’ is a buying opportunity for investors

Waning ‘tech wreck’ is a buying opportunity for investors

by LLT Editor
30th May 22 11:05 am

Tech stocks have been radically beaten-up in recent months as interest rates are hiked, but savvy investors are now starting to increase exposure to this currently out-of-favour sector, says the CEO of a global financial giant.

The observation from Nigel Green, chief executive and founder of deVere Group, one of the worldโ€™s largest independent financial advisory organisations, comes as the tech-heavy Nasdaq 100 futures rose ahead of the open on Monday, as major indexes snapped long weekly losing streaks on Friday.

He notes: โ€œThe tech-heavy Nasdaq has shed almost 27% of its value so far in 2022.

โ€œAnd earlier this month – as the U.S. Federal Reserve, the central bank of the worldโ€™s largest economy, raised interest rates – the biggest technology companies, including Amazon, Meta, Alphabet, and Netflix, lost over $1 trillion in value in just three trading sessions.โ€

He continues: โ€œHowever, as the losing streaks are beginning to be reversed and a bounce back begins, in-the-know investors understand that this yearโ€™s massive rout is now likely to be an important buying opportunity.

โ€œYou might not jump on the exact bottom of the tech wreck, but your future self in years to come will not thank you for sitting on the sidelines now.

โ€œClearly, avoid the โ€˜buy everythingโ€™ mentality, but working with a good fund manager, you can scout out the discounted tech stock.

โ€œWhy? Because their previous success is based on fundamental megatrends, which means their current low values are opportunities.

โ€œThese are real business models which are supported by demographics and accelerated by client behavioural shifts, which not only remain, but continue to grow.โ€

His comments come as Netflix stock has plunged almost 69% year-to-date, while another tech giant, Amazon, is down more than 35%.

These are just two examples of companies that โ€œare still impressive, and forward-thinking with good fundamentalsโ€, says Nigel Green.

He concludes: โ€œSavvy investors know that technology-driven solutions and the digitalisation of our lives is set to continue at lightening pace. Therefore, adding discounted, quality tech stocks ahead of the next rally makes good sense.โ€

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