Tech stocks are getting slammed yet again, for familiar reasons. Investors can blame worries about higher inflation, expectations of tighter monetary policy from the Federal Reserve, and—more recently—a serious spike in bond yields. The tech-heavy Nasdaq Composite index dropped 1.8% Tuesday.18 Jan 2022
Is tech still a good investment?
"Valuations still look expensive relative to the S&P 500," say RBC Capital Markets strategists in their 2022 outlook. However, "Tech ranks the best among all sectors on our quality metrics, ranking at or near the top for all factors that we evaluated." Read on as we unveil our 12 best tech stocks to buy for 2022.3 Jan 2022
Why do higher rates affect tech stocks?
It is because when interest rates are rising, growth sectors like tech need to deliver much higher growth rates to justify the risks investors take for a higher return. Also, rising rates reduce the value of future cash flows, reducing the value of current stock prices.7 Jan 2022
Can stocks become worthless?
To summarize, yes, a stock can lose its entire value. However, depending on the investor's position, the drop to worthlessness can be either good (short positions) or bad (long positions).
Is tech a good investment?
"In general, many tech stocks are great long-term bets, but having a long-term investment win when you are forced to get out short-term due to liquidity issues doesn't help," he explains.