Volatility is the hallmark of Bear Markets. Volatility is at all time highs and forecasted to stay that way for awhile with or without Trump on off again tariff trash-talk.
Tempted to buy the dip in US stocks? Stop and think again. US Tech stocks have risen the most and now the have begun to decrease the most. For a decade and longer a handful of tech giants like Amazon AMZN, Meta META, Microsoft MSFT, Apple AAPL, and Alphabet GOOG have led the stock market higher, rewarding investors who bought every dip. That long-term bull-run may be over for the time being and not necessarily because of tariffs or other negative factors.
A Bear Market for Big Tech
Apple: down 21% YTD, Microsoft: down 13%, Nvidia: down 24%, Alphabet: down 19%, Amazon: down 21%, and is Meta: down 14%.
For the longest time the Magnificent 7 and other top SP500 companies had as much weight as all the others combined. The biggest US companies were also the most expensive too which is something that has rarely been seen in history.
We’re now firmly in a bear market for US big tech. With the rest of the stock market, on average 70% of all stocks follow the broad market. So in this case for the rest of the market, it’s down. That’s a seismic shift after more than a decade of dominance, where these US Tech companies not only led the market but carried it higher.
In years past trillions came in from foreign investors from Asia and Europe into US Tech companies as they did not want to miss out on the uptrend. Today foreign investors own twice as much as they did after the 2008 market crash, and 2009 bottom. This foreign ownership in these US tech stocks is beginning to decrease as these stocks and US Dollar are in decline now.
This means we’re likely to see billions, maybe trillions, shift out of the big names and into other markets around the world. Investment money has been and is continuing to flow into Emerging markets around the world now. The only reason you might want to buy-long right now on US stocks in this current market is for a dividend later on.
Show Me The Money
There is value and growth longer-term now with leading companies in emerging markets such as China, Korea, Brazil, Europe, Mexico, South America, India, and the smaller Asian countries too. Country ETF’s are one way to get exposure to emerging markets and reduce risk. Future buy-long trade plans will be issued on these emerging market country ETF’s.
The high flying leading US stocks as with the rest of the broad market basically topped out in October 2024. They then slightly grinded higher after that until tariffs talk uncertainty hit the global markets and economies causing the US stocks selloff in the already overvalued market.
In January 2025 DeepSeek AI out of China shook up the world with a ChatGPT alternative that rivals Silicon Valley’s best and runs at an exponentially lower cost. More importantly it signaled something critical that the US may no longer hold a monopoly on innovation. The world could easily see more DeepSeek style innovation moments from China and or other foreign companies now.
SP500 US Tech Stocks Overweight
Since these US tech giants make up such a huge portion of the S&P 500, they could drag it sideways or down longer than most people forecast. Just like they once pulled it up before. A flat to continued down S&P through 2025 is very possible.
You can still profit on the buy-long side by investing into some dividend paying stocks, emerging markets, basic materials, and US value growth mid-cap and small-cap stocks. Sectors and stocks to watch to buy-long moving forward are solar energy, cybersecurity, and the new disruption company types of stocks.
Buying the dip in US tech stocks no longer works and can be very detrimental to your portfolio at least near-term. Although there is always a tradeable counter trend to the main trend to speculate on, be careful right now buying long unless your ready to hold for years to come.
Of course you can always sell-short and make money on the downside.
