With most tech stocks now down for the year, it’s time to talk about which to buy.
The answer is simple. Buy technology that cuts costs or creates value.
There’s a lot of stuff that does neither. Crypto doesn’t, so Coinbase (COIN) and Robinhood are out (HOOD). The metaverse has yet to get a killer app, so Meta Platforms (META) and Roblox (RBLX) can wait.
The other Cloud Czars are fine. Salesforce (CRM) and ServiceNow (NOW) are fine. Adobe (ADBE) is fine. The cybersecurity stocks like Palo Alto (PANW) are overpriced, but over time they will come good.
Then you want to look at efficient users of technology. On the consumer side this gets you into the retail space. It means you can buy Costco (COST) and Walmart (WMT), Target (TGT) and Lululemon (LULU). On the business side there are a bunch of industrials you can grab, like John Deere (DE) and Johnson Controls (JC).
The best bargains may be in the health care field. Companies like Danaher (DHR) and Thermo Fisher (TMO) are the arms merchants of the medical revolution. Companies like Moderna (MRNA) and Regeneron (RGEN), which have systems for drug discovery, are better than any company that just has drugs.
There is a revolution coming to health care. There must be. The system is collapsing. Managed care can work, but only if it’s complete and well managed. CVS Health (CVS) makes sense to me, as does United Healthcare (UNH), which has the scale to succeed in this business.
A lot more opportunities are going to emerge in the next few years. A market trough, and that’s what we’re in, is when entrepreneurial imaginations are most free to fly. It has something to do with the lack of resources. I’d rather buy a 2024 IPO than anything from 2020 or 2021.
If you want to be safe, money is now worth money so sell some, by buying bonds. Look inside any company with a high dividend and only buy it if their business model has legs. (Oil companies don’t.)
Don’t listen to the doomsayers. This is a great time to be an investor. You may take some losses, investors always do, but if you focus on the basics of technology that works and change that’s needed, you’ll do fine.
