When Tech Stocks Go Down, So Does the Entire Stock Market
By Saghir A. Aslam
Rawalpindi, Pakistan
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfil their religious and moral obligations towards charitable activities)
Veering into Virtual Reality
In October 2021, when Facebook was still riding high, Mark Zuckerberg changed the company’s name to Meta, signaling his new focus on “the metaverse” — a nascent blend of virtual reality and social networking. In a letter to shareholders, he said achieving this vision would be expensive but worthwhile: “Our hope is that within the next decade, the metaverse will reach a billion people, host hundreds of billions of dollars of digital commerce and support jobs for millions of creators and developers.”
I’m agnostic about this claim. It’s quite possible that the metaverse will pay off in a big way, though it may not.
It’s a big risk. But that’s what tech growth-stock investing is all about: placing a risky bet in the hope that it leads to exponential, immensely rewarding growth. Sometimes, such bets pay off.
You need to look at the different circumstances and your own family situation what kind of risk are you willing to take.
Although stock market at the present is more trend tours, to go and down then up, this maybe the time for you to do the proper homework, do your complete research, and find the companies that have a history of good earnings. Year after year I normally select the company that has earnings record and I have found over the years this has paid off very well for me, thanks to Allah SWT for his blessings.
Market Discipline
But the market environment for most of this year hasn’t favored risky ventures like this. To the contrary, it has, for the most part, been a decidedly “risk off” year — with money flowing out of speculative bets like the metaverse and cryptocurrencies into safe niches like short-term Treasury bills and money market funds .
Recall that as recently as September 2021, when tech stocks were still in vogue, the market valued Facebook at more than $1 trillion and ranked it as the sixth-most valuable publicly traded firm in the world.
If you are conservative, you want to invest more on the save site than at this point you may want to stay away from the high-tech flyers as listed later on in this article; on the other hand you may want to establish more stable companies that have less fluctuation in price and they are safer than some of the high flyers.
But as skeptical reviews of Meta’s version of immersive reality spread, and the enormous costs of the experiment became evident, the market turned against the company. Apple’s tighter privacy rules didn’t help. They limited Meta’s ability to sell targeted ads that run on iPhones, and constrained its revenue. In one single day in February, Meta’s shares lost $230 billion — more, by some accounts, than any company had ever shed in one day. The flogging has continued. After fresh revelations on October 26 of disappointing earnings and ever-bigger expenditures on the metaverse, the stock plummeted again. It is now worth around $300 billion on the stock market — less than a third of its value last year. Meta announced large-scale layoffs on Wednesday, an act of fiscal discipline that may stem the rout of its stock but that leaves its future open to question. To be continued.
This article is written in collaboration with Walt Hommerding senior vice president investment of Wells Fargo .
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds, or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)
