Due to tensions with Russia and rising inflation in the United States, U.S. stocks have gotten off to a very poor start in 2022. Especially hard hit have been stocks in the Technology sector. Cathie Wood’s ARK Invest ETF’s were high fliers and have been walloped. When stocks suffer these dramatic sell-offs, it is tempting to rush in and snap up these “bargain-priced” stocks. Patient investors with a longer-term time horizon can certainly be rewarded. However, investors should not feel rushed to buy these beaten-up stocks.
When a stock price drops dramatically, the price rarely recovers in a parabolic fashion. Usually, the stock will move sideways, building a base. The stock will often stage a rally, only to pull back and languish for a bit. This time seems no different for many of these Technology stocks.
Now is the time to be building a watch list of stocks that could be candidates to purchase once the volatility settles down and the new leaders of the next leg up in the market emerge. In the meantime, Energy stocks and some dividend-paying stocks seem to be a decent place to be at the moment.
