How You Can Be a Tech Stock Winner in 2019
This year I’m going to…oh, what’s the point!
Two days ago, hundreds of millions of people made promises and resolutions. Most (in the US at least) had wished to save more money or lose more weight in 2018.
I’ll bet two days ago, people made resolutions and are hoping for similar outcomes in 2019.
But like I said, what’s the point?
Research says roughly 8% of people that make New Year’s resolutions actually keep them. For the remaining 92%, it’s a quick count down to 12 January.
Why this date? According to researchers, this is when most people give in and break the promise they made to themselves.
What happens after those 12 stressful days? The 92% of people feel like losers. They feel like investors felt at the tail end of 2018.
Maybe your New Year’s resolution was to make money from tech stocks.
And if it was, you’re in luck. Today I’m going to show you exactly how to be a tech stock winner in 2019.
New Year and new opportunities
You don’t have to make money to be a winner.
Actually, let me rephrase that. You don’t have to make money immediately to be a winner.
Banking on returns in the next five days or three months, might leave you extremely disappointed. That’s because any number of things can happen to mess with short-term returns.
Stuff like an intensifying trade war, a surprise in US inflation or more negative press on the tech giants. It all creates volatility, but a lot of it has no real effect on most ASX-listed companies.
But this is a new year. Investors don’t want to hold onto the problems of 2018.
The clock has reset. The game starts again. Prices are low and investors are gearing up to find the best picks for the 12 months ahead.
But the problems of 2018 haven’t gone away. And 2019 will come with its own set of new problems. You could argue that tech is still a trade most investors are shying away from.
Even though the NASDAQ was up more than 7% towards the end of 2018, any number of events could push it right back down.
Guessing which new event will pop up next and how it could affect tech stocks, is a mugs game.
If you want to make returns immediately, you’re far better off moving with the crowd. Momentum rules in the short-term. Yet it’s not something that usually works out long-term.
Of course, that doesn’t mean you can’t use this volatility to your advantage. A great example is the whole Chinese online gaming industry freeze.
A few good tech opportunities
Early last year, Chinese regulators put a halt to all new games. The Middle Kingdom has a system where all publishers need to gain a license from one regulatory body. That way, regulators can censor any images, language or ideas they don’t like.
The gaming freeze was an attempt to limit the amount of time youths spend sitting in front of a screen. China doesn’t want their children playing mindless video games. They want them learning to code or thinking about starting a tech business.
Regulators also gave no indication of how long the license freeze would last. Industry giants like Tencent Holdings Ltd [HKG:0700] and NetEase Inc [NASDAQ:NTES] fell 24% and 32%, respectively.
And here was the opportunity…
Investors could buy into stocks others were fleeing. While you didn’t know when the gaming freeze would end, you could be pretty sure it would end at some point in the future.
So, all you had to do was buy a beaten down Chinese gaming stock that wouldn’t go broke and sit on your hands.
This bet is still playing out for some investors. But everything seems to be moving in the right direction. Just last year (December), Chinese regulators approved 80 new game titles for the first time.
‘China’s gaming industry, which generates more than $30 billion of revenue, has been hammered this year after regulators froze the approval process for new games, preventing companies from making money off hit titles.
‘…[But] China has approved 80 new video game titles in the first batch of licenses granted by the media regulator after the end of a nine-month freeze.
‘The initial games were mostly local, mobile titles and didn’t include any from industry giants Tencent Holdings Ltd. or NetEase Inc. The notice of approvals was posted online by the State Administration of Press, Publication, Radio, Film and Television.’
‘The list consists largely of mobile games by smaller, domestic developers,’ PC Gamer wrote.
Like I said, this bet is still playing out. Next for Chinese game publishers is to see earnings rise, along with their stock prices.
Time will tell if the bets of 2018 will pay off in 2019.
And this is exactly how you can be a tech stock winner in the New Year. Take advantage of volatility. Use pessimism to your advantage.
You might not necessarily make money in the next 12 months, but you will have set yourself up with great odds to make money over time.
Bring on the New Year!
Contributing editor, Tech Insider
PS: In this just released report, Matt Hibbard shows you his top five dividend picks for 2019. Click here to claim your copy today.