Skip to main content

I'm Trying to Understand the Tech Stock Decline (and Why I Might Recommend Buying More Tech Stocks)

Live Index

Yes, the global stock market is currently down. There's no use for the Filipino people to blame President Ferdinand R. Marcos Jr. for that matter. At this point, I'm still invested in the ATRAM Global Technology Feeder Fund (read here). Right now, I've observed the trend went downward. After the CrowdStrike outage and some problems at Microsoft--I expected that there would be a downward turn. The reasons why stocks appreciate and depreciate are company performance, investor sentiments, industry performance, and economic factors. All these drive the supply and demand up and down. With what happened to Microsoft and CrowdStrike, the setback may have caused people to sell off their Microsoft stocks. In turn, the supply of Microsoft stocks will increase again and the demand will lessen due to investor sentiments.

As I Googled "Why must the stock market go down", I ran across the four reasons that the stock market is plunging this 2024. One of the reasons is because of the technology stock sector. Here's what's written and it would make sense why technology stocks are currently down, blaming it on high expectations:

Some of the worst-hit stocks during the rout can be found in the tech sector, with the so-called Magnificent Seven, a group of tech stocks including Amazon, Apple and Nvidia, among the market's worst performers on Monday. Nvidia, the chip company whose technology powers artificial intelligence, has shed 23% of its value since July 31. 

Prior to last week, these stocks had been among the year's best performers, which meant that Wall Street had lofty expectations for their revenue and profit growth. And while their earnings reports have been solid so far this year, they haven't wowed investors.

"Even if earnings come in as expected, the valuation multiples are so high that it's hard to sustain" those prices, PNC's Agati said. "Investors are panicking, and this is a really rapid sentiment shift."

She added, "We don't think the underlying fundamentals support this shift. For the most part, the Magnificent Seven have been fine in terms of earnings results."

It's easy to have high expectations in the tech sector. I invested some money in the ATRAM Global Technology Feeder Fund and the AXA Global Opportunity Fund for that reason. However, we must understand that what goes up, must come down. The Microsoft problem is just one of them. People have been using Microsoft for a long time.  

May 2022


If we take a look at this sample allocation done by ATRAM--it can be easy to tell why it went down. Microsoft and Apple are in the list. You have Alphabet (Google) and Amazon. It would mean that these sectors are all affected. If the companies are reliant on Microsoft and Crowdstrike--I can just expect that a global outage shifted consumer sentiments. It can say, "Oh no! What are we going to do?" for those companies. Flaws and setbacks are bound to happen every now and then. That's why there's always the need for updates and double-checking. For some people, they may be looking at this as a temporary setback. They would think that Microsoft will eventually bounce back.

Pretty much, here's what CBS News' Aimee Picchi would recommend for those who are currently invested: 
First it's important to understand that stock downturns — even sharp ones — are common. Although the S&P 500 is down roughly 8% from its peak in July, drops in equity prices of 5% or more have occurred at least once a year for the past four decades, according to Oxford Economics. Market corrections, or a drop of at least 10% from their highs, occur an average of every one and half to two years, the firm said in a report. 

But even bear markets, or when stocks decline at least 20% from their peak, are normal and aren't a reason to panic, experts say. While the temptation might be to sell, it's best to resist that urge, especially for people saving for the long-term such as for retirement. Market timing, or trying to buy and sell stocks to capture gains and avoid losses, is notoriously difficult and can lead to lost opportunities, research from Charles Schwab has found.

"If you are a long term investor, take a deep breath — it is very scary, I get it," Jill Schlesinger, the business analyst for CBS News, told the network. "As long as you are in a long-term portfolio, you shouldn't worry."

Moving into cash "is never a good investment," added PNC's Agati. That's especially the case when the Fed is widely expected to cut rates as early as September, which will reduce the returns for savings accounts and money market funds. 

"If you are worried about your retirement plan, I wouldn't be pulling the plug and moving to cash," Agati added, noting that he would look at investment-grade fixed income investments or U.S. Treasuries because they may provide more attractive yields moving forward.
Labels:

Popular posts from this blog

Filipino Manufacturing's Golden Age ENDED Because of the Filipino First Policy

Here's a picture from the Dose of Disbelief Page on Facebook. Here's something that it wrote: Filipinos once trusted locally made products more than imports. Before World War II, the label "Made in the Philippines" carried prestige, not stigma, reflecting a strong sense of national confidence in domestic production. Local products such as shoes, cigars, textiles, furniture, and food were often preferred over imports. This preference was rooted in the belief that local goods were better adapted to local conditions, tastes, and were often of comparable, if not superior, quality. This period showcases a strong historical era of consumer nationalism and thriving local industries. We need to look into the context of Filipino history  If we look at the Philippine history timeline , we must account for 1935-1940, during which the Philippines was under the Commonwealth government. Independence was declared from Spain on June 12, 1898. However, there was a transition period w...
Read more

External Validations, like Masters and Doctorate, Mean NOTHING with a LOUSY Education System

I have the tendency to use my MBA as a license to avoid criticism. It's a real problem that some people use their credentials and/or academic achievements to try and win an argument. One incident I wrote about was Rep. Raoul Abellar Manuel flexing his "smarts" by using his cum laude degree to win the argument . It was all about how I would often say, "You're the moron because I have the MBA and you don't." There are times I felt like taking an MBA would make up for my "moral shortcomings" during high school when I was barely passing (and the passing rate was 80% , which is rather high), that I wasn't having honors, and that there was this saying, " Thou grades shalt determine thy future! " That, of course, has led to the reality where cheating is prevalent .  I wanted to make a review. I took my MBA in 2011 and graduated in 2014. I always felt that the MBA program was what I needed to become "invincible". It was also at ...
Read more

No Hard-to-Earn Economics Degree is Required to Know That a Welfare, Anti-FDI Philippines is Destined to FAIL

GMA News When it comes to constitutional reform, I'm afraid one of the worst sources quoted would come from the Makabayan Bloc. Some people I face who are so against FDI also want to end the OFW program. The solution comes out rather absurd, as the Philippines must have its own state where it's all beg and beg . It would be like: "Free education for all! No to FDI for schools!"  "Free lunch in school!" "No to open FDI! The government must fund our local production!"  " Increase the salaries, lower the prices of goods! " (which is just plain bad accounting ) That's just a few of the crazy demands that have been given! My favorite question has always been, "Where will you get the funding?" The usual answers can be: " Print more money! " "The government should just make it a law!" "Tax the rich all the more!" which can often be accompanied by, " After all, it's the fault of the rich that p...
Read more

How Foreign Direct Investments Can Also Help in Local Philippine Agriculture

I must admit that I'm getting tired of all the misrepresentations of foreign direct investment (FDI) on Facebook. Such misrepresentations can come from "think-tanks" such as IBON Foundation, Bayan Muna, and the Philippine Anti-Fascist League. That's why I wrote a couple of posts such as (1) how we need to focus on environmentally-friendly business practices (read here ), (2) that FDIs don't always lead to environmental degradation (read here ), and (3) asking the question if you're willing to support local businesses that destroy the environment (read here ). Besides, economic protectionism isn't a guarantee that environment will be friendly. Both North Korea and Venezuela are known to have very bad environmental practices. Just reading about them can make you dizzy. Protectionism ended up destroying agriculture than protecting it Mao Zedong's "great leap forward" was evidence In contrast to what those "think tanks" want us to belie...
Read more

Why I'm Not in Favor of Nationalization of Utilities Mixed with Protectionism

ToonPool There's the call of leftist fools to stop privatization. Many still believe that utilities should be run by nationalization rather than privatization . I've been reading on Facebook where some fools believe that allowing foreign telecommunications companies (telcos) to invest in the Philippines will "risk security". Any telco will risk security if there are no laws to regulate it like the Data Privacy Law. Just because I support private enterprises doesn't mean that I say the government is hands-off. On the other hand, the government has the duty to set rules such as fair compensation, proper employee treatment, safety measures, and the like to make sure that we remain in healthy competition. Some people who keep protesting against the privatization of industries I believe (1) want the government to provide for all the needs of the people (which leads to dictatorship, eventually), (2) have some agenda as to why they're doing it, or (3) these people ar...
Read more