Big tech stocks were hammered earlier in the week amid a report that the Department of Justice has been given jurisdiction for a potential antitrust probe against Apple. The DOJ and Federal Trade Commission are reportedly preparing antitrust probes into Facebook, Google, and Amazon.
Capital Wave Strategist Shah Gilani said that the major tech companies are being aggressively targeted because they may finally see a regulatory crackdown by the federal government.
“What the market is now indicating is that all these stocks that have held up so well over the last couple of years of talk of regulatory changes coming that never came, now all of sudden, it’s almost like they’re deer in the headlights,” he said on “Making Money Monday.” “Like wow, this could happen. It is starting to happen between the Department of Justice and between the FTC and between other regulatory bodies stepping in. It looks like these stocks are going to face the music they have been avoiding for a couple of years.”
As a result, Gilani says he will likely remove some of the tech stocks from his portfolio.
"I am going take a hard look at whatever positions I have left, and probably put some stops in and get out, go a little lower because right now I don’t know what the bottom will be with some of these stocks.”
Gilani’s advice for long-term holders of Apple and Amazon stocks would be to be patient because he doesn’t see them as potential concerns as Google and Facebook. His investing strategy is to jump out of stocks, even profitable ones, when they start to drop below where he came in.
“I have a very simple philosophy. I pretty much put a stop close to where I got in. If a stock comes back down, and obviously even if I’ve had a profit it’s come back down, I’m out because my premise of getting in and where I got in has changed if it breaks that price, especially if the stock has been up 10-15% from where I got in,” he said.
In S&P Portfolio Manager Erin Gibbs’ opinion, Apple is the safest big tech stock to have in your portfolio.
“I still like Apple. I think that is just one of your safer plays. I’m a little more concerned about how the revenues are going to be hit and what’s really going to happen with more of the platform like your Facebooks and Googles. I think Apple has enough within their product services to be a little on the safer side.”
She adds that Google is probably the most vulnerable long-term stock.
“Google might be one of them where there is just more competition. Other people would be able to come in and take that part. Everyone just has such a dominance and such strong cash flows that they would be able to defend themselves against competitors,” Gibbs said. “I think you really have to look at how much cash do you have on the sidelines and how are you able to defend [against] the competition. I just feel the space that Google is in for most of their products, not all, it is just such fiercer competition that they are at a weaker place than some of the others.”