Tech Stocks Are Expected To Deliver Huge Returns In The Long Term; Should Investors Buy In Now?
No doubt it has been a pretty good year for tech stocks. Whether we are looking at this year’s stock market performance or going back five or ten years, top tech stocks on Nasdaq have been consistently climbing over the years despite some short pull-backs once in a while. The truth is, no one knows where exactly the stock market is heading next. However, identifying the best tech stocks to watch at the forefront of consistent trends is a ticket to big gains. After we have managed to identify a list of tech stocks that are here in the long run, buying their stock dips can push the long-term returns even higher. By contrast, the slump in tech stocks this week could paint a slightly different picture in the short-term.
As Jim Cramer puts it, “Major tech stocks may start selling off, but investors shouldn’t panic”. The Mad Money’s host warned that investors who have major positions in the technology industry should brace for volatility during this earnings season. Coupled with the news of unexpected unemployment, it is reasonable for investors to turn pessimistic. “If you want to own these stocks right now, you’ve got to be willing to take some pain. You’re going to have to watch the rest of the market catch up a bit to them while they decline in value.”
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Major Tech Stocks Experienced Sell-Off Pressure After Reporting Earnings
We saw positive quarterly reports from both Microsoft (MSFT Stock Report) and Tesla (TSLA Stock Report). Yet both stocks experienced selling pressure after the announcement. As soon as we enter the coming week, three other major tech stocks are reporting their quarterly results. Amongst them are Apple (AAPL Stock Report), Facebook (FB Stock Report), and Alphabet (GOOGL Stock Report).
No matter what qualms may have contributed to the sell-off of top tech stocks, investors shouldn’t sweat too much about it. In my personal opinion, investors might want to stop caring about the valuations and focus on the prospects instead. I get it, the company’s vague or poor guidance for the remainder of the year are making investors feeling a bit uneasy towards their future. But hey, you can’t blame them.
We need to come to terms that we are living in an unprecedented time. And there’s an unexpected escalation in certain demand, causing that particular tech stock to heat up too fast. Maybe Netflix (NFLX stock Report) isn’t worth $500 after all when the pandemic ends. Well, maybe it isn’t worth $500 today, but who knows $500 might be a value buy if you look back from the future?
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Tech Stocks Are Still The Best Sector To Bet For Consistency & Profitability
No matter how you slice it, tech stocks will continue to march forward regardless of whether there’s a pandemic or not. But investors who have continued to pour into large-cap tech stocks that appear to be immune from the broader economic downturn are now having second thoughts. Nothing about the tech slump on Thursday is suggesting the end of Nasdaq’s rally. Maybe the job data claims are contributing to the pullback. Or perhaps the tension between the U.S. and China is also contributing to the sell-off.
In any case, that doesn’t necessarily mean that people need to sell out all their tech stocks. After all, we will get past this crisis. And when we do, the technology sector still holds the most promise for delivering superior returns in the long-term. In my opinion, investing in tech stocks that you believe may still be dominating the industry a decade later could be a wise move. And when they dip further in the future, you could potentially want to consider buying more.