It’s true. The tech stocks really are falling. Last year, I was a brilliant investor. So far this year, I’m just like the market. A big fat loser. Here’s a look at a few of my most recent purchases and how they are faring over the course of the past three months.
INTU -14%
PENN -21%
PINS -48%
MRNA -54%
UPST -15%
HOOD -58%
FUBO -48%
It’s not pretty. But here’s a few important points to remember.
1) Until you sell the stock, it’s only a paper loss. And since I don’t have any immediate need to sell any shares of any companies, time is ultimately on my side.
2) The stock market, over the long term, always goes up. And it will again. It may not happen this year or next, but in the end the market will recover and continue its upward trend and many of these stocks will create longterm value. Although I’m not too sure about Robinhood.
3) Any large pullback, and this one isn’t a 20% market correction yet, affords buying opportunities. Some of these companies, like FUBO or PINS, were just wildly overpriced and are based on speculation for future growth. But other companies, like SHOP, have real earnings and strong growth prospects. Those companies are worth doubling down on.
In the short term, I plan to invest in financial companies that pay a decent dividend and have strong prospects for long and short term appreciation. The Motley Fool doesn’t recommend boring financial stocks that pay a 3-4% dividend but right now that return sounds pretty good to me. Kiplinger’s released their best 12 Financial Stocks for 2022 and the recommendations included:
MET (Metlife) Dividend yield 3.1%
C (Citigroup) Dividend yield 3.4%
CFG (Citizens Financial Group) Dividend Yield 3.4%
RE (Everest Re) Dividend yield: 2.3%
AIZ (Assurant) Dividend Yield 1.8%
It’s not easy to switch from expecting 30-40% overall gains in your portfolio to targeting a 6-8% return. But smart investors know it’s prudent to reduce risk and happily accept smaller gains during rocky market conditions. I won’t be selling any of my positions, but I won’t be buying any tech stocks any time soon. Instead, I’ll view this as an opportunity to get more exposure to some good, old fashioned boring financial and insurance stocks that will help balance my portfolio and provide steady returns in good years and bad.
