Tech Investing: Now’s The Time To Buy Tech!
The markets haven’t given us much to be optimistic about lately. Obviously, an 18% correction in the S&P 500 this summer is anything but bullish.
Yet, that’s exactly what happened from July 21st to August 9th. The S&P 500 shed 247 points as panicked investors hit the sell button. And the choppy market action since then hasn’t been encouraging either.
And here’s the kicker… I’ve been telling subscribers of Sector ETF Trader to expect a massive selloff like the one we got!
In February I said, “I’m starting to get a little uneasy…
We’re really in unchartered territory. We’ve never seen the Fed expand its balance sheet to this size before. So there’s no telling how or when this bull market will end.”
Then in March I said, “in the short-term I think the bad news has reached a tipping point. It’s time for a market correction.”
And again in April, “When the first round of quantitative easing ended in April of 2010, we had the flash crash. And then the S&P 500 proceeded to shed 17% over the next two months. Suffice it to say, history isn’t on the market’s side…”
In May, “It’s a clear sign of a market running out of gas. And it’s a trend I expect to continue throughout the summer.”
And then I really hit the nail on the head in June.
“Economists will have no choice but to slash their predictions for US and global economic growth.
And it’s just the beginning… I believe the economy’s going to get worse before it gets better.
What’s more, I think economists will slash their growth predictions too far in the second half. As usual, they’ll extrapolate on the weak economic data and begin calling for a recession.
When they do, it will offer up some great buying opportunities. Until then, it’s best to play defense.”
And even last month I said, “Prepare yourself for a bumpy ride… because stocks are stuck in the 24 hour news cycle.”
Now, after all that, it’s time to get bullish!
Simply put, weaker than expected economic data and negative headlines fueled an investor panic. Now analysts and investors are overreacting to the downside.
And it’s created a fantastic buying opportunity!
The bottom line is, right now everyone assumes the slowdown will continue unabated until the economy dips into a recession. But the truth is, there’s no evidence things will actually get that bad.
Remember, companies have shown a fantastic ability to grow revenue and earnings even as economic growth slows. As a result, even with modest 1.5% US GDP growth stocks are a screaming buy.
One area I see bouncing back quickly are the large cap tech stocks.
I’m talking about companies like Apple (AAPL), IBM (IBM), Microsoft (MSFT), Google (GOOG), Oracle (ORCL), and Intel (INTC).
Why?
Growth in developing countries is a major component fueling these tech stocks. We should see large cap tech’s exposure to developing markets cushion the impact of slowing growth in developed countries like the US and Europe.
An easy way to get exposure to these large cap tech stocks is the Technology Select Sector SPDR (XLK).
XLK holds 85 tech stocks. And it’s heavily weighted toward the large cap tech stocks with exposure to growth in developing markets.
Take a look at XLK for your portfolio. Tech stocks look like a screaming buy to me.
Category: Stocks
