The brutal 2022 for stocks due to rising interest rates and rising inflation has been particularly rough for technology-based growth stocks, and that could be an opportunity for longer term investors.
Jefferies Equity Research Analyst Brent Thill told Yahoo Finance that every rally we've seen in tech has been met with harder selling in a lower low. He said that it's a good time to get into the tech space for investors with a three to five year window.
If you think about it, Thill said you want to buy when sentiment is terrible and sell when things are great. We're at one of those moments in which everyone is saying how bad tech is and how evil it is, and everyone is running away from it. Many investors have flocked to the energy sector. It's another key for money to come back to tech if and when the trade starts to falter, Thill said.
Every of our clients went to a recession portfolio - owning energy, owning dollar store, owning Coke, Pepsi, McDonald's, and at some point that trade reverses, he said.
Thill stressed that high costs in gas and food are leading to consumer weakness, so big box retailers Walmart WMT and Target TGT are feeling the pinch shoppers are shifting their preferences for discretionary spending.
Thill believes that weakness will spread to enterprise companies?
Microsoft recently cut its guidance for fourth-quarter profit and revenue, suggesting that it may be the case in the near term.
Microsoft didn't say that the fundamentals were terrible, but we worry about that potential that is a warm-up act for them to say Foreign exchange has gotten more difficult, so is the fundamental business, Thill said. Everyone is worried, and that's going to cause a lot of worry going into the July quarter prints and June quarter end.