The S&P 500 is off to a historically bad start in 2016, and big-name tech stocks that have relied on growth to lead the bull market higher in recent years, such as Netflix (NFLX), Amazon.com (AMZN) andFireEye (FEYE), have also led the market fall so far in 2016. This year appears to be shaping up as a year of defense and value for the tech sector, a transition that could be good news for owners of China Telecom (CHA), IBM (IBM) and Verizon (VZ).
Let’s take a look at just why that is:
The Big Rotation: From NFLX to VZ
AMZN and NFLX were the two biggest gainers in the S&P 500 in 2015, but so far this year their stocks have declined around 20%compared to the 6% decline in the S&P 500. The large sell-offs in these big-name tech stocks have led to media headlines about the tech sector dragging down the market. In reality, what the tech sector is witnessing is not a sell-off, but rather rotation out of overpriced growth stocks and into defensive value plays.
That’s where VZ, IBM stock, and CHA stock come into play.
In fact, many investors that have read about the 2016 tech stock sell-off might be surprised to learn that the Technology Select Sector SPDR (XLK) has actually outperformed the S&P 500 so far this year.
Yes, China Telecom Is a Value Stock
If you’re looking for defensive value stocks to play in a bearish or unpredictable market, there are…
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