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Monday, January 2, 2023
Today’s newsletter is from Brian Sozzieditor-in-chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Read this and other market news wherever you are with Yahoo Finance app.
Yes, markets are closed today.
So you’re probably wondering why I deliver a morning brief newsletter straight to your inbox.
The answer to this question is simple: if you don’t seek to improve yourself as an investor every day, even on days when the market is closed, you risk losing in the long run.
And you better believe that others around the world are trying to improve themselves around the clock. Eat or be eaten in world markets.
To that end, I offer a quick investing lesson for those who might be preparing to buy whole hogs. rundown tech stocks Right out of the gate in 2023.
We all know the backdrop of technology entering the new year.
Chew this exchange myself and colleague Brad Smith had with a veteran technical analyst Marc Mahaney at Evercore ISI on Yahoo Finance Live Last week:
Yahoo funds: Can tech rebound without a Fed pivot or at least a pause?
Mahany: I stop on your pause question. So I guess the answer is no, it can’t. But that’s the scale of the movement. And so going from zero to expectations of over 4%, 4% to 5%, that’s a massive move. And going forward, I just don’t think the interest rate shock will be as big as what we saw last year. So that’s sort of the answer to your question. I think if rates continue to rise and the Fed remains hawkish, it will be very difficult for growth tech stocks to perform materially. I don’t think they would be underperforming like they have this year.
We stomped on the show’s friend Mark, pointing out how difficult it is to pick tech stocks right now.
Investor sentiment is weak about what tech companies can deliver in terms of revenue and earnings results this year, as most economists and investors are bracing for. sluggish economic growth.
The easiest way to see this concern is through the lens of the markets: the Nasdaq Composite fell 33% in 2022.
Former high-flying tech stocks such as Snap (BREAK) and Tesla (TSLA) ended the year at 80% and 65%, respectively. The cash cow, safe haven that is Apple (AAPL) lost 27% last year.
Again, the feeling is right now.
And that should be until tech companies can prove they can reaccelerate growth and turn more revenue into bottom line profits for investors.
But therein lies the catch – tech stocks will continue to suck the wind until the Federal Reserve signals a pivot on interest rate policy. And everyone knows it.
So the first part of your lesson is to proceed with caution on seemingly “cheap” tech stocks until we get that more dovish Fed.
The second part is that you have to be ready to act before the Fed gives the green light.
And if you think you’ve found a great thesis that comes with a heavily discounted value, it may be worth mucking away.
One of these names could be Meta Platforms (META), as Mahaney suggests.
“I just think you’re going to have a major repricing in Meta stock,” Mahaney said.
The struggling social media company, formerly known as Facebook, enters 2023 with a valuation near bottom and the imminent benefit of billions of dollars in cost cuts.
These are cost-cutting tech rivals such as Amazon (AMZN) and Google (GOOGL) still haven’t taken, making Meta stocks “relatively” more attractive.
And if cost-cutting isn’t exactly a thesis you’re passionate about in tech stocks, you can thank Jay Powell for that. The ball is in his court.
What to watch today
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