SAN FRANCISCO — Technology investors brave enough to still be looking for fourth-quarter investment ideas may want to look to the leaders left standing among the third-quarter rout in tech shares.
Among the 20 most-valuable U.S. public tech stocks, two companies stood out for their outsized returns during three months when most tech stocks suffered double-digit losses and the Nasdaq fell more than 7%.
Google’s valuation gain of $65 billion the day after its second-quarter earnings report was among the 20 largest one-day surges in the history of U.S. markets, according to Ned Davis Research.
One other notable gainer in the quarter has also been a tech-stock leader all year. Netflix NFLX shares rose 10%, putting it among the Top 25 most valuable tech firms for the first time, at a valuation of $44 billion.
Amazon is now among the five-most valuable U.S. tech firms for the first time.
Amazon and Google have been market leaders for six months among big-cap tech shares, as we’ve tracked here for this quarterly column.
So has Facebook FB, whose shares rose 5% during an otherwise very bad quarter for tech investors.
The biggest loser among the big-caps in both share price and total valuation was Alibaba BABA, the Chinese e-commerce giant.
The one-year anniversary of its record-breaking IPO in mid-September was not a bullish party, as the stock sank 28% in three months.
It shed a massive $41 billion in market value, costing dearly the portfolios of those who overpaid for an otherwise fast-growing and profitable company.
But Alibaba was not alone in suffering from worldwide jitters over China’s economic growth and the plunging price of oil, usually a leading indicator of world economic growth.
Stocks don’t go down for no reason, even though they often seem to, as the late, great Yogi Berra might have said if he was foolish enough to cover Wall Street, instead of home plate. (RIP Yogi.)
The third quarter was a comeuppance for global GDP bulls, as the International Monetary Fund cut its forecast for worldwide growth to 3.3%, from 3.5%.
If the forecast is accurate, the global economy will grow less than the 3.4% it grew in 2014.
This week, Goldman Sachs cuts its estimate for S&P 500 earnings and trimmed its year-end target for the index by 4.3% to 2,000, from 2,100 previously.
Some-sized economic deceleration is coming, stocks are telling us, so I’d be playing defense if I had an actively-managed portfolio. (I don’t, since I’m an index-only investor.)
But for those who can’t resist buying stocks even while stocks are falling, Google, Amazon and Facebook, based on their status as market leaders for at least several quarters, are likely to hurt your portfolio the least.
A more prudent strategy would be to wait until the overall direction of the market improves before wading back in as a buyer.
Top-five valuable tech companies, Q3 stock returns:
Apple, $629 billion, -12%
Google, $491 billion, +19%
Microsoft, $346 billion, flat
Facebook, $259 billion, +5%
Amazon, $244 billion, +18%
Follow USA TODAY columnist John Shinal on Twitter: @johnshinal.
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