The tech waters have gotten a whole lot stormier in the past month, and while some may think the coast is clear as they go bottom-fishing for value, I’d argue that it’s never a good idea to let your guard down, even if you’re a net buyer of stocks on a decline. The harsh truth is that the stock market doesn’t care what price you started putting new money to work.
Though it would be nice if markets would trend lower after you’ve gotten an opportunity to get in, the most probable scenario would likely entail grappling with even more rough waves and, yes, the occasional wipeout. But if you’re confident in a name and its long-term story, don’t let the massive waves and volatility push you off course.
If anything, I hope for bigger waves and more near-term downside so that I can really place a big bet on a stock that I believe in. Perhaps it’s the behaviour and actions taken when times are tough that are the difference between good investors and truly great investors.
Tech stocks have been hit hard. They could get hit harder, but waiting comes with risks, too!
Right now, the tech trade seems to be in the no-fly zone, so to speak. Sure, we’ve seen relief, but at the same time, a lot of AI innovators, including some of the prized blue chips, are under significant pressure. It’s tempting to hold off and tell yourself that there’s a reason the names are down so much right now.
That said, if there is an overreaction, investors who’ve been longing for a dip in tech stocks may not wish to stay sidelined with fear. Though the good “deals” could certainly become door-crasher specials by the time Boxing Day 2025 rolls around, one must ask oneself if it’s worth getting a modest deal in case stocks across the board end up being marked up by the year’s end. Of course, buyer’s remorse with stocks can be quite common among newer investors.
However, one must also consider the feeling of being left empty-handed should the next leg in markets end up higher. For young investors with decades to invest, perhaps the latter scenario is nastier than the former. Either way, tech sales happen. And while they can get better, there’s also no guarantee that they will. If anything, a markup might continue, even if it defies the “AI bubble” sentiment that’s been surrounding the market of late!
Constellation Software stock: A deal too good to pass up?
When it comes to good deals in the tech scene, I think sticking with proven names is a good way to go. Constellation Software (TSX:CSU) is one name that I’ve been pounding the table on after shares imploded in the past couple of weeks. It’s hard to believe the software firm, with a $69.8 billion market cap, used to be a “smart beta” darling of the market. The name is falling under its own weight, but my bet is that it’ll find its way again, with or without a recovery in the broad tech sector.
The stock may be a falling knife that’s lost more than a third of its value in just a few months. But I don’t think the value or promising fundamentals have deteriorated as much as the stock price decline suggests. Even amid AI uncertainties and bubble woes, I think shares of CSU could be a great piece of merchandise to walk away with as the tech sell-off continues to unfold (or reverse course).
