Bad Times for Big Tech Can Mean Good Times for Investors
Recent actions by the U.S. government don’t bode well for the big tech companies. That’s because, for the first time in many years, both political parties are on a mission to pare down both the size and power of key players in the sector, namely Amazon, Microsoft, Google (Alphabet Corporation), and Apple.
Why are political enemies teaming up on some of the biggest members of the tech sector?
The why doesn’t matter as much as the when, but the main motivator behind the politicians’ scorn seems to be a sort of universal aversion to corporations that might have grown too big or, in the eyes of the Democrat party, too successful. Regardless of the varying motivations to take down big tech, the results are almost certainly not going to buoy the stock prices of the companies in question. How can ordinary investors profit from big tech’s troubles? There are numerous ways.
Some aim to use short-selling techniques and make direct gains from falling prices. Others take a more optimistic approach and seek to invest in companies that might do well when bit tech entities are under the regulatory gun. Here are four key things to keep in mind as the fortunes of the large technology firms get ready to face tough sledding.
Have the Right Tools
The first step to taking advantage of a market sector that’s possibly about to implode is to have the right tools. Even those new to investing and trading can get in on the action is they have reliable, easy access to speculative markets like forex, futures, CFDs, and others. For example, working with a broker who has a proven track record of customer support and using a capable trading tool like the MT4 platform are all it takes to get started.
Of course, it makes sense to have everything in place before the big news hits. What kinds of headlines and announcements are you wanting to see? Any official administration announcement of anti-trust suits being filed, congress getting ready to pass new laws that would effectively break up large tech corporations, appointment of anti-business operatives to high-level positions in the DOJ, FTC, or SEC (as has already happened during the first few months of the Biden administration), and any type of regulatory sanctions leveled against particular companies or groups of companies.
Rather than make attempts to short the big tech stocks, consider using a more positive approach by seeking out companies that might benefit from the fall of the tech giants. It’s no secret that entities like Amazon, Microsoft and others have dozens of eager, much smaller competitors, all of whose stocks would likely experience price rises in the event of a crackdown on the major players in the sector.
Consider Day Trading
Day traders often have an ability to earn profits in upward, downward, and sideways markets. How do they do it, and what can this ability mean for those who wish to profit from big tech’s fall? Historically, corporate restructuring and breakups mean an early share price drop, a rebound, another drop, a smaller rebound, and so on.
Each new collapse tends to be followed by a smaller but cyclical rise. Day trading strategies simply play the undulations, selling short before the drops and going long before the recoils. For traders who like to take part in daily action and use major news headlines and political trends to take small profits several times per session, day trading can be an ideal way to get involved.
It’s not always possible to trade foreign exchange currencies based on news about one or two corporations, unless those companies happen to be global giants with thousands of employees and outsize profits. Forex traders nearly always follow economic and government regulatory news quite closely. When a company as large as Alphabet or Apple releases a positive earnings report, the repercussions in forex markets can be huge.
The trick is waiting for bad or good news to break and watching how various national currencies respond. In the case of large, U.S.-based tech entities, bad news can have a ripple effect, so it’s hard to assume how any one national currency will be affected. The technique is about watching and waiting to see which direction your favorite forex pairs are headed and then placing trades accordingly.
For any trader, having knowledge about what is likely to happen, even a few days or weeks into the future, can represent a major opportunity for profit-making, regardless of whether the news is positive or negative.
Where to Find the Latest Tech Investing Tips Online
Whether it’s a good market or a bad one, there are always going to businesses and professionals that continue to make money in either scenario. This is why it’s always so important to make sure you have all your bases covered, and also know what new trends and industry shifts might be on the horizon.
If you enjoyed the content in this article, we highly recommend you take a look at these other investment blogs and see what the latest trends are in the world of business, tech, finance and investing today.
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