Strategists reveal how to trade the sell-off
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Strategists and investors have shared their strategies for playing the tech market. They cited several stocks that they believe could offer investment opportunities. Apex Financial Service president Lee Baker described Apple and Microsoft to be “good solid” companies that investors should consider. Speaking to CNBC’s Squawk Box Europe on Friday — before the market’s temporary recovery and subsequent fall — he said the tech market was “getting pretty close” to the bottom. You can think about the Nasdaq as a large basket. It’s not something I know I am ready for, especially in the tech sector. He said that companies such as Apple and Microsoft, which you already know to be solid businesses, look attractive. Apple continues to invent. Like everyone else, they are affected by supply chain issues. [are]He said that the company was a highly sold one. Technology-heavy Nasdaq is currently down 27%, and hit a 52-week high on May 12. Apple shares are down 20%, and Microsoft has fallen 24% in 2022. Baker advises that investors plan to invest in stock within the companies for a period of three to five years. Patrick Armstrong is the chief investment officer of Plurimi Wealth Management. He also recommends Apple’s “Defendable Profit Margins”. Speaking to CNBC Thursday, the day after both the Dow Jones Industrial Average and S & P 500 posted their biggest losses since 2020, he said: “I own Alphabet and I own Apple … These companies have strong profit margins and are able to buy back shares. David Sekera is the chief U.S. strategist for Morningstar. He likes Alphabet and Microsoft. He told CNBC that although the stock prices have fallen more than the market average over the past year, he still believes these companies are worth long-term investors. Kristina Holper, Invesco’s chief global market strategist, said that the tech crisis is similar to the burst of the dotcom boom. “What we are about to witness is less of the 2000 and 2001 tech bubbles. I expect the tech industry’s more speculation-oriented parts to feel the pressure. There could be some missteps but tech will come out of this strong,” she said on CNBC’s SquawkBox Europe. Plurimi’s Armstrong said his strategy was to own companies that are trading around 10 times earnings, and short companies with much higher multiples — unless they have good cash flow and profit margins. Armstrong has held short positions at Just Eat Takeaway and Delivery Hero as well as Ocado, a grocery technology company. Short stock positions make investors money when they are worth less. Hooper stated that she believes the sector will hold its own despite the Federal Reserve Bank raising rates. Fed rates were raised by half a percent on May 4. They are expected to keep the current cycle. “If we look historically at the tech sector’s performance during Fed rate hike cycles after initial difficulty — because again, they go through a rerating process, especially so because of higher valuations — tech stocks have actually held up relatively well historically during those rate hikes cycles,” she said. Hooper advised being cautious when purchasing tech. Hooper advised that you focus on those companies that are cash-flow positive and have higher net profit margins. Although they’ve been hard hit as well, I believe these can still be good buying opportunities. Her comments included that volatility market sentiment is sometimes driven by “a visceral and very, very emotional response.” This type of sale offs are not very thoughtful or selective. This creates great buying opportunities for the thoughtful and selective. Peter Garnry of Saxo Bank’s equity strategy said that tech’s sell-off is similar to the 2000 dotcom bust and that now is the best time to seek out “long term winners.” There will be blood everywhere, and there will also be casualties. But, out of all these losses, there will still be long-term winners like Amazon, Microsoft, or even Amazon. [and chip stocks]He said that although Qualcomm, Intel, and AMD suffered huge losses during the dotcom bubble, long-term winners still exist.” He spoke to CNBC’s Squawk Box Europe in May 9th. This time, we will experience the exact same dynamics and cycles as before. Garnry stated that he liked semiconductor stocks and software stocks because of companies’ move to digital technology. He also tipped commodities, cybersecurity and defense as sectors to be on the watch for the next 8-10 years. — CNBC’s Zavier Ong contributed to this report.
An exchange trader is working on the New York Stock Exchange floor at the NYSE American Options Market, April 16, 2018.
Brendan McDermid | Reuters
Strategists and investors have shared their strategies for playing the tech sector that is in decline. They cited several stocks opportunities in the market, which they believe could be at the bottom.
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