Should You Buy the Tech Dip? A Veteran Analyst Says Be Careful
Ted Mortonson is the tech strategist at Baird, a role he holds on the firm's institutional equities research team. Baird's research team page lists him in that role.
Baird announced his arrival on 10 March 2020. The firm said he joined with more than 30 years of technology experience in senior sales and management roles at major sell-side firms. Baird's 2020 announcement described that background. The same profile says he has covered the technology sector for three decades.
A sell-side firm is a brokerage that publishes research on stocks and sells trading and advice to large institutions. Buy-side funds are the ones that use that research to make investment decisions.
MarketWatch ran a story under the headline "A dot-com survivor warns retail investors against buying the tech dip." The headline presents it as a warning for individual investors, not big institutions. The MarketWatch article is the place to check what was actually argued.
"Buying the dip" means buying after prices fall, betting they will bounce back. The catch is that a dip only looks like a dip after it happens. The same drop can later turn out to be the start of a bigger fall.
Depth matters, and a little arithmetic shows why. A 10 percent fall needs a gain of about 11.1 percent to get back to even. A 30 percent fall needs a gain of about 42.9 percent. This is math, not a forecast. But it explains why a sector slump can take a long time to recover from, especially for someone who bought early.
Big funds and individual investors are in different positions. A large fund can buy in slowly, hedge its bets, and ride out swings with a team that manages risk. An individual may have less money, a shorter timeline, or need cash on a fixed date. Warnings aimed at individuals usually rest on those limits, not on a view about any one stock. That is the reading the headline invites.
There are three things a reader should weigh. The first is what has happened: prices, earnings, and what the company says about the future. The second is what the market has already priced in. That often shows up in valuation multiples, which are ratios that show how much investors pay for each dollar of profit, along with the expectations built into them. The third is the strategist's view of what comes next.
In my view, only the first is fact. The second can be measured with some care. The third is an opinion, however well informed the person giving it. Tech strategists have made confident calls in both directions across many market cycles.
So the more useful question is not whether he has been right before. It is whether his argument holds up on its own terms. What valuation or earnings conditions does it assume? What would prove it wrong? And does the advice fit the investor who might act on it? Those are the questions a professional asks of any strategist's call, and they apply just as well to a warning against buying weakness.
To be clear, nothing here is a recommendation to buy or sell any investment. A warning against buying the tech dip is a view about timing and risk. Whether it fits a particular portfolio depends on that portfolio's size, time horizon, and how much further loss its owner can handle. A news column cannot know any of those things.
