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Tech Stock Sell-Off: Should You Be Scared?

Investors appear to be taking the recent tech-stock sell-off in their stride today with the share prices of many technology businesses pushing higher.

Indeed, it was thought that the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) would come under some pressure today following the recent rut experienced on Wall Street – specifically within the tech-heavy NASDAQ index. Some of the world’s biggest technology companies, including Alphabet and Apple, have seen billions of dollars wiped from their market capitalisations since Friday, reversing some of the staggering gains achieved year-to-date.

Some investors will likely be feeling anxious, with many electing to take their profits and go in search for value elsewhere. For others, the sell-off could be perceived as a perfect buying opportunity.

Should you be scared?

The panic surrounding tech stocks doesn’t appear to have hit Australia in quite the same was as it did in the United States. Part of that could be due to the recent past of our own market: our tech sector experienced something of its own rut recently as investors moved their capital away from growth and towards the resources sector.

For the record, some of those funds have returned in the time since, partially due to the subsequent decline of resource prices such as iron ore and oil. That said, the Catapult Group International Ltd (ASX: CAT) share price is still well below its previous highs, together with others such as Pro Medicus Limited (ASX: PME).

However, a number of tech shares have actually risen in price today, while the ASX 200 itself is up around 0.7%. The Pro Medicus share price is trading 1.8% higher and the CAT share price is up 0.8%. Others, such as Freelancer Ltd (ASX: FLN) and Webjet Ltd (ASX: WEB), have fallen, although their losses so far are both under 1%.

What Happens Now?

Although the thought of your shares declining in value can be unnerving, investors should take the opportunity to remind themselves why they bought shares in those businesses in the first place. If you’re still confident in that business’ long-term prospects, and believe that its shares are offering value today, then a short-term decline in its share price shouldn’t be overly concerning (in fact, it could even be an opportunity to buy more, depending on your level of confidence).

It’s unclear whether Australia’s technology shares will suffer the same kind of sell-off as those in America are right now, but remember to think long-term: ignore the noise of the market and focus on the bigger picture.

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The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Alphabet (A shares), Alphabet (C shares), and Apple. Motley Fool contributor Ryan Newman has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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