It’s been a bumpy year for tech stocks and tech volatility is set to continue for the short-term. After hitting its all time high in February, the Nasdaq sharply corrected 12% and then recovered over the course of the following 8 weeks. Now, Tech is in a bit of a mini-correction again dropping 5.5% over the past 2 weeks. It’s not a controversial stance to say that Tech’s volatility is likely to continue into the 2nd half of this year. Many investors are taking note and have been rotating out of tech and into sectors that are supporting the reopening of the economy and the recovery from the pandemic.
Well, it’s not so much, “goodbye” as it is, “see you later.” Tech has made investors a TON of money over the past 5 years. Even before its meteoric rise after last year’s COVID correction, the famed Big Tech stocks’ appreciated $5 Trillion over 5 years. It can be tough to make a rotation out of a sector that has benefited investors for so long, but it looks like that time has come.
It’s not just that Tech is over-owned, there are other major threats that are going to contribute to further tech volatility this year.
So, while tech volatility will continue for the short-term, it doesn’t mean that tech is finished. In fact, the recent sell-of could produce a significant buying opportunity in tech stocks that have solid valuations and long-term viability. Clean energy and other innovator stocks could be bought at bargains right now. These types of stocks could quickly eclipse hot 2021 sectors like energy in the coming years.
Investors have been rotating out of tech and growth stocks and into value and recovery stocks since mid Q1. With the re-opening on a fast track thanks to COVID cases plummeting, recovery stocks seem to be the safe and profitable place to ride out any other volatility.
ALL the way back on Jan. 1, we recommended that investors pay attention to the Real Estate sector. More specifically, we said to pay attention to the hospitality and travel sector of CRE. The COVID lock-downs decimated hospitality stocks last year. Now, with a travel demand at feverish levels, this sector is still poised for massive growth.
We recommended our readers to look at MGM Growth Properties (MGP) and APPLE HOSPITALITY REITS (APLE). Both stocks have done well this year but have not had the benefit of realizing the impact of a re-opened economy and summer vacations.
APPLE HOSPITALITY REIT still looks very attractive. They are the largest owners of upscale hotels in the country, with properties such as HYATT, Hilton, and Marriott. Beyond the desire to get the hell out of the house, vacationers are going to put a premium on cleanliness when it comes to where they stay. Names like HYATT and Hilton are synonymous with cleanliness and customer service.
Other sectors like industrials will remain stable and growing this year. Stocks like Caterpillar (CAT) and Deere (DE) would benefit tremendously from the infrastructure bill.
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