Use This 4-Part Approach to Beat Choppy Markets-UBS

• Tech stocks have been hit particularly hard in what has been a rough 2022 so far for markets.

• UBS CIO Mark Haefele and strategists Sundeep Gantori, Christopher Swann, and Vincent Heaney remain positive on equities though.

• They have come up with four-pronged strategy for investors to prosper this year.

It has been a choppy start to 2022 for the stock market to say the least, and tech names have been hit particularly hard.

Earlier in earnings season

Netflix

shares were hammered by weak earnings, then this week, there was a dramatic 25% slide in Meta, formerly Facebook, followed by huge swings in the stock of Amazon and Snap. 

Some of last year’s super-performers have become this year’s laggards. PayPal lost nearly 25% in a single day on Wednesday after missing earnings expectations, while

streaming

giant Netflix lost 21% after falling short on new subscribers. The two are second- and third-worst performing stocks in the Nasdaq 100 since the start of the year, respectively. 

Poor updates from big names inevitably hits sentiment and drags the wider market down to some degree, with the S&P 500 and Nasdaq firmly in the red for 2022 so far.

But it’s not all doom and gloom. Dips in stocks can bring opportunity though, and investors with cash to deploy are weighing up what to do, and whether to dive in and buy. 

Mark Haefele, who is chief investment officer of UBS, the world’s largest wealth manager, together with strategists Sundeep Gantori, Christopher Swann, and Vincent Heaney have taken the temperature of the market and summarized their thoughts as follows.

“The fall in equity markets so far in 2022 is primarily due to the

Federal Reserve

‘s pivot to a more hawkish stance,” Haefele said. “And the most expensive areas of the market, including tech, have led the decline, since the net present value of their more distant profits is reduced by higher yields. Rate concerns have been added to by disappointing 4Q21 results from some mega-caps.” 

“The mix may be different, but aggregate earnings for the tech sector are growing. Downward revisions for digital media and e-commerce companies have been offset by positive revisions for more traditional IT industries including semiconductors, software, and hardware,” he said. 

Haefele said the most disappointing results and guidance have come from consumer business models that depend on user growth…