This week I returned to CNBC to discuss the best moves to make during a market dip (thus far December has been volatile). During the segment I discuss moves to make in sectors that are down, including energy and technology.
The energy sector has been incredibly dangerous and we think everyone should be cautious. The problem is that investors may think oil has hit its low, so they pick up a downtrodden energy company. However, most of the energy companies are priced off proved and unproved reserves in the ground. If oil and gas keep falling, their prices will also keep falling. An investor buying into this space now is catching the proverbial falling knife. Given the uncertainty, we would avoid this area as a buyer.
There’s also been a hit to some big technology names like Facebook. However, as our Ramparts readers know, we like to play technology on the business to business side rather than the consumer side. People today are using and advertising on Facebook, but 10 years ago it was cable TV. We see people’s interest move, consumer technology is going to move. That being said, we favor the B2B side of technology, companies like NetApp, a hybrid data management and cloud storage solution, could use some love and buying beaten-up companies is a good play in the technology space.
Click the picture below to watch the segment.