The majority of the big technology stocks have taken heavy losses in 2022. The technology-heavy index NASDAQ and the Dow Jones Industrial Average are both down by over 26% in the first half of 2022. While many have taken this as a sign of something to worry about, let us pay attention to what investors have to say.
Technology giants have taken a brutal hit. Apple, which helped drive the historic stock market rise over the last decade, is down 24.1 percent. Google’s stock price is down by 28.1 percent, Amazon is down 39.4 percent, and Meta, the parent company of Facebook, is down 47.2 percent.
Due to the US Federal Reserve interest rates hike and the Russia-Ukraine war, global stock exchanges and markets have taken a hard hit. However, experts believe that the present downfall that we’ve seen in the global market is unlikely to move into a further downward spiral, and the worst may be over.
Technology and growth stocks have been some of the worst hit, since the war, along with fresh lockdowns in China due to the COVID-19 pandemic have damaged global supply chains. However, experts still hint that focusing long-term investments on developed technology companies can still turn out to be profitable.
David Rubenstein, co-founder of the private equity firm Carlyle Group and a billionaire investor, believes that the markets are “overreacting”. According to him, a company like Netflix, which has over 250 million subscribers, is worth more in his view than what it’s currently trading for, even if it were not worth what it was in the market a few months ago. In his view, when markets “overreact” in such scenarios, it is the perfect opportunity for other investors to go in and “buy at the bottom”.
Berkshire Hathaway Inc, the brainchild of Warren Buffett, invested $41.5 million in net stock purchases in the first quarter of 2022. This is the most amount of cash that Buffet’s company has splurged in a quarter since 2008. Buffet saw the unpromising start to 2022 to be a good sign to invest large amounts in the market.
Historical evidence to help
Don’t just listen to experts and billionaires to buy the dip; consider some historical data. Be it the market’s reaction in September 2001 post the 9/11 attack, the market crash of 2009 due to the bursting of the United States housing bubble, or the market crash that occurred in 2020 as a result of the COVID-19 pandemic, the market has always managed to recover. People who buy the dip and globally diversify tend to see the greatest returns.
Consider this, if you had started investing in late 2021 when there was a surge in growth and technology stocks, you might be down quite a bit. But, if you’ve been part of the game long-term and you had bought Netflix stocks, say, five years ago, your stocks would still be profitable, even with the downfall.
Long-term investors stand to have the maximum benefits. Markets have proven themselves to be resilient in the past and have taken all but a matter of months to recover. It is just a matter of time before markets begin to rise once more.