How to Invest in Tech Stocks After the Market Sell-Off

After hitting a record high of 5,231.91 on July 20, the tech-centric Nasdaq Composite has fallen 8.1% in just over a month.

Nasdaq Chart

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That's why we turned to Money Morning Defense & Tech Specialist Michael A. Robinson for advice on how to invest in tech stocks now. He's a 30-year veteran of the tech market and has seen countless stock market corrections.

Even after significant rebounds today (Thursday) and yesterday, the Nasdaq Composite is still only up 1.1% in 2015. As of July 20, the Nasdaq had posted a year-to-date gain of 10.2%.

Seeing those gains erased so quickly has left many investors panicked...

"The extreme volatility we've seen on the tech-heavy Nasdaq Composite isn't easy to watch, for anyone, but the last thing anyone should be doing right now is giving in to emotion, joining the panicked herd, and dumping perfectly strong stocks with huge upside," Robinson said.

The first thing Robinson recommends is lowering your exposure.

"This doesn't have to be complicated," he said. "Simply halve the money you'd normally invest and keep the rest as 'dry powder,' so you'll have cold, hard cash on hand when the market sorts itself out - as it always does."

But you shouldn't just worry about protecting your money. We're in this to grow our wealth as well. That's why Robinson recommends this investing technique that will not only protect you from a stock market correction, but will also let you take advantage of huge profit opportunities...

How to Invest in Tech Stocks Now: Use the "Cowboy Split"

Tech InvestingOne investing technique that Robinson recommends now is called the "Cowboy Split."

"The Cowboy Split entails buying a portion of your target stock at the market price and then putting in a lower limit order for the rest of the position you'd like to buy," Robinson explained.

Let's say you want to buy shares of XYZ Corp., and they trade for $100 right now. First, take half of your investment capital and buy shares at that $100 price.

After that, enter a lowball order at a lower price point you would be comfortable buying at again. Say $80.

"That way, you catch any rally that occurs on that first tranche, and you set yourself up to pick up even more on any sizeable decline," Robinson said. "You end up with an average purchase price of $90 a share."

"So when the stock climbs to $120 (and if it's tech, you can be sure it will), you've increased your profits by a bigger margin, a total return of 33% versus the 20% you would have made by taking a full position at $100 a share."

Not only have you created a larger profit that you originally would have, you also protected yourself from another correction.

The Bottom Line: Tech stocks have fallen 8.1% in the last month, but one of the worst mistakes you can make is fleeing the market. For investors wondering how to invest in tech stocks now, Robinson recommends first lowering your exposure and then employing the Cowboy Split on any stocks you want to buy.

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