Top 3 Ways Financial Research Can Help Your Portfolio Through Tech Layoffs
12 April 2023 12:00
The tech space has boomed for decades, and most investment firms and financial institutions have invested consistently and aggressively in the area. As a result, tech stocks have led the pack throughout the 21st century's historic bull market, with the biggest tech stocks all outperforming the S&P 500 over the last 10 years. But now that technology stocks have started to sputter, how can financial services pros know if investing in tech is still the right play?
As established tech brands and startups alike scramble to find their footing in an increasingly turbulent economic landscape, the time has also come for financial services professionals to reevaluate the industry—and to adjust their financial research and investment approaches accordingly.
Navigating technology investments might be more difficult now than it was a few years ago, but by staying on top of industry news, paying attention to early market indicators, researching what businesses and sectors are weathering inflation well and using the right research tools, financial professionals can feel confident in their portfolio strategies.
Monitor current events
It’s universally understood that markets fluctuate as breaking news and industry shifts unfold. Anything from a major company’s announcement of layoffs to a wave of news coverage focused on supply chain issues can have a dramatic impact on stock prices.
The tech industry—perhaps more than any other—is especially prone to dramatic disruptions, with new companies and technological advancements hitting the market every week. In a landscape so prone to instability, it’s critical for financial services professionals to stay on top of current events and industry news to decipher the potential impact those changes could have on their portfolios.
Unfortunately, sifting through the noise to get the information you need can be difficult. The internet is continually flooded with changing information and speculation surrounding breaking news—some more trustworthy than others. And it takes time and effort to monitor news—which many financial pros don’t have.
That’s when a research tool comes in handy. For example, Nexis offers access to more than 45,000 news and business sources, including international, national and regional news from print, broadcast and web publishers. By using an analytics tool, you can set up alerts for key topics or companies and emerging industry trends to get news in real time with minimal effort and get the information you need to make informed financial decisions.
Consider company KPIs
Now more than ever, financial advisors and analysts must keep a close eye on the health of their current portfolios and potential investments. While reports of widespread layoffs in the tech sector might set off alarm bells, it’s important to dive deeper into the market trends that caused those layoffs, leveraging research tools to develop a holistic understanding of a company’s overall performance.
After all, a tech giant like Microsoft laying off workers to cut costs and appease shareholders is a very different move than a scrappy startup cutting its team because it underestimated how quickly and efficiently it could reach profitability
Monitoring key performance indicators like revenues, expenses, net profits and liquid capital can offer valuable insight into how a company is managing its business amid economic instability, as well as whether it is on target to meet its long-term goals.
Like keeping up with the news, finding that information can be an arduous task, but, again, the right research tools make this easier. Consider using a combination of Nexis plus Nexis Dossier, offering instant access to a wealth of annual reports, quarterly financial results, announcements regarding future business plans, analyst reports and much more.
This not only gets you the information you need but saves you time as a one-stop-shop for all your company KPI research.
Be aware of past financial trends
Inflation rates in have surged over the past year, making everything from groceries to energy bills more expensive. The latest wave has also contributed to a steep increase in layoffs at major technology companies—chipping away at the value of many investments along the way.
It comes as no surprise, then, that the impact of rising inflation has been a hot topic among most investors and financial advisors in recent months, with many adjusting their allocations and embracing a more risk-averse approach to their portfolio strategies as a result. Specifically, some are moving away from investing in tech in favor of industries and companies that have historically weathered economic turbulence better than others, like energy, healthcare and consumer staples.
In times like this, looking to the past can offer valuable guidance on the best investment opportunities for the near future. When evaluating potential investments, take some time to understand how your target company (or other companies in a similar industry) performed during previous inflationary periods or financial crises. Nexis can help with this, allowing you to quickly analyze corporate financial reports and legal histories to better predict how each target may weather inflation over the short, medium and long term.
Ready to find the information you need to stay on top of the latest tech trends driving investor strategy? Schedule a free demo of Nexis today.
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