Tech Confidence
Reactions to the economy and reactions to the stock market are 2 completely different things. Let’s say the economy is going through a severe downturn, and as a result the value of the stock market has fallen by 20 percent. A citizen might be worried about their job security or their expenses, and they’ll be wondering how to adapt to the situation. On the investment side, it’s a known fact that investors love recessions and stock market declines because it provides them with an opportunity to buy some good businesses at decent prices.
Usually, there’s an agreement for when it’s a good time to buy during a market decline. However, this is not one of those occasions as the debate is very heavy. So far, the market decline has been a cause of inflation hurting the economy, and what’s left is the market’s interpretation of interest rates and its effect on the economy. For individual investors, this is the bottom for them, and they are picking up stocks. After all, they might be right as the stock market finished July up almost 10 percent. The stocks they are picking up are the ones that are the most beat up, which means we are looking at the tech sector. Purchases of popular tech and growth stocks have reached the highest level since 2014, with some names including Amazon, Tesla, and Apple. Leveraged plays are being made on these names, with companies like NVIDIA receiving benefits through positive government policy. Government policy is the biggest risk facing these companies though as high interest rates affect their businesses the most due to higher borrowing costs. Considering the downside risk, these are really risky bets to make given the uncertainty, but it can work out big if investors hit the mark with valuations.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
