Is It Time to Buy Tech Stocks?
It’s Always Time to Buy Tech Stocks. Here’s Why.
As calendar years go, 2022 was a tough one across the board for equities. The Fed’s pivot toward inflation resulted in 425 basis points worth of rate hikes across the year, dealing a particularly heavy blow to stocks of companies with longer-term cash flows. Blue chip stocks were down, small-cap stocks were down, and international stocks were down– all by sizable amounts.
But they all paled to the damage inflicted on the technology sector.
Through 2022, the Nasdaq 100 — the best benchmark we know for the tech space – dropped an astonishing 33%, the index’s fourth-worst year in its history. Major players in the tech world saw massive declines – Facebook, Tesla, and Amazon all lost more than half of their market value. By any measure, 2022 was bad for tech companies.
Turnarounds Cut Both Ways…
But, by a similar measure, 2019, 2020, and 2021 were great for technology, with gains of 37%, 47%, and 26%, respectively. And guess what? The increases across the first few months of 2023 have been eye-popping as well. At the end of May, the Nasdaq 100 had layered on a healthy 25%, meaning the index has recovered about half of last year’s losses.
If nothing else, the action of 2023 is a screaming reminder of why you stick with a long-term view of investing – good stocks in general, tech stocks in particular. This year, investors are loading up on names new and old as the sector surges at breakneck speed. Two stocks – Nvidia and Facebook parent Meta Platforms – have already doubled. (Factoid: Nvidia gained $184 billion in one day in May, more than the market cap of Netflix.)
It’s a Long Game…
There are many reasons to think the rally in big tech will continue, but given the vagaries of today’s economic and political environment, forecasts for the sector are mixed. There will undoubtedly be rally periods followed by weak periods. Investors might want to consider strategies that build exposure during downturns while positioning for the inevitable turnarounds. Dollar cost averaging is still the best way we know to capitalize on short-term corrections. While hardly as exciting as artificial intelligence or ChatGPT, buying stocks on sale works because over the long term, asset prices inevitably rise.
And the Nasdaq 100 is still the best way we know to participate in the potential of the world’s most important companies. With over $15 trillion in market cap, the index includes iconic names like Microsoft, Apple, Google, Tesla, and Facebook. With a basket of such leading names, no one should be surprised that despite last year’s downturn, the Nasdaq-100 Index® has generated an annualized return of nearly 18% over the last ten years.*
That’s over five percentage points higher than the S&P 500 for the same period.*
A Good Way to Play…
You can invest in the Shelton Nasdaq-100 Index Fund (Ticker: NASDX), a fund with a 20-year track record that is designed to track the index.
NASDX received an Overall Morningstar Rating of 5 stars among 1,123 Large Growth funds, based on risk-adjusted returns, as of 4/30/2023. With over a 5-Star rating from Morningstar and over $1 billion in assets, NASDX has a demonstrable record of success in achieving its objective.
If you’re the type of investor who likes the idea of investing in companies making an impact towards the economy of the future, you may want to take a closer look at the Shelton Nasdaq-100 Index Fund.
Important Information
Important Information
*Source: Bloomberg (5/1/13 to 4/28/23)
An investment in the Fund involves risk, including possible loss of principal. Fund information is not intended to represent future portfolio composition. Portfolio holdings are subject to change and should not be considered a recommendation to buy individual securities.
The Fund invests in the largest non-financial companies that are traded on the Nasdaq Stock Market. They are currently concentrated in the technology sector which has been among the volatile sectors of the U.S. stock market. During a declining stock market, this fund would lose money. It would potentially lose more money than other large cap funds.
Nasdaq®, Nasdaq-100® and Nasdaq-100 Index® are trade or service marks of The Nasdaq Stock Market, Inc. which with its affiliates are the “Corporations”) and are licensed for use by the Fund. The Fund has not been passed on by the Corporations as to their legality or suitability. The Fund is not issued, endorsed, sold, or promoted by the Corporations. The Corporations make no warranties and bear no liability with respect to the Fund.
Shelton Funds are distributed by RFS Partners, a member of FINRA and affiliate of Shelton Capital Management.
Investors should consider a fund’s investment objectives, risks, charges, and expenses carefully before investing. The prospectus contains this and other information about the fund. To obtain a prospectus, visit www.sheltoncap.com or call (800) 955-9988. A prospectus should be read carefully before investing.
INVESTMENTS ARE NOT FDIC INSURED OR BANK GUARANTEED AND MAY LOSE VALUE.
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The Morningstar RatingTM for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.
