What to Do with Your Big Tech Stocks Right Now

No two ways about it: Higher rates and the "bond bogeyman" are here to stay. For how long? Could be a few months, maybe a few quarters. Or... maybe even a few years.

Rates are going higher because there's more money - trillions more - in the financial system, courtesy of the Fed. As the economy continues to climb out of the hole it was in, if only momentarily, and more of the country opens up, the "velocity" of money - the speed at which it moves through the system - will pick up. All of this points to higher rates and inflation.

In the long run, that recovery is good news... but it feels like cold comfort right now.

Bondholders are feeling the pain, because as yields rise, prices fall. That simple but inescapable inverse relationship is rocking their world right now.

People who own stocks are feeling the pressure, too. The hard-charging, hell-for-leather Nasdaq Composite, which has been the undisputed market leader since 2009, is down more than 7% in just a month.

A lot of people are wondering whether their Big Tech shares, which have treated them beautifully over the past 12 uncertain, turbulent months, are about to nosedive. That's what I'm getting asked on national television.

I'll tell you what I tell them - plus some of what I can't...

How the Trend Is Changing

"Don't fight the trend" is a cliched old market adage for a good reason - it happens to be true. Very much so.

For months, the trend's been pretty good for us - pandemic stocks like online retail and biotech, personal tech like Zoom, going long on big bullish moves, and short on companies and sectors that couldn't adapt to the pandemic. The results speak for themselves - 15 Hyperdrive double- and triple-digit trading wins along since late 2020.

FIVE STOCKS TO BUY: These specific companies could be hit with a projected $353 billion "tidal wave" in the next 18 months. Learn more...

The trend happens to be changing, that's all; investors and traders who change with it will find there's even more money to be made.

Right now, the trend is toward showing economic recovery, climbing employment, more stimulus coming, probably a higher minimum wage, and almost assuredly trillions in infrastructure spending.

In other words, all of the big and little generators of rising rates are lined up perfectly and firing on all cylinders.

Like I said, this necessarily changes the way profitable investing happens.

The Easiest Ways to Profit from the Changing Market

Bondholders, particularly those holding longer-dated paper, should try and shorten their maturity horizons. Treasury inflation-protected securities (TIPS) make a lot more sense now. These track the consumer price index (CPI) and protect against inflation; the principal increases with inflation and decreases with deflation. Once they're mature, you get the adjusted principal or the original, whichever is greater.

If you're feeling aggressive - and why not? - consider short-term bullish trades in vehicles like the ProShares UltraShort 20+ Year Treasury ETF (NYSEArca: TBT), a leveraged exchange-traded fund that returns three times the money when rates rise and bonds fall.

If you absolutely, positively must buy bonds, the best thing to do is wait a couple of quarters.

Stocks are something else...

As of yesterday afternoon, March 8, the Dow Jones Industrial Average and the S&P 500 were both up 550 points and 20 points, respectively.

But the aforementioned Nasdaq Composite was down 130.

I'd get used to that if I were you. It's emblematic of what's going to be happening for at least the foreseeable future as capital flows into "recovery" stocks and sectors like energy and the financials.

In other words, it's time to be extremely selective with your tech investments. During the pandemic, for instance, you could throw some speculative capital at any tech company, and you'd probably find something that stuck. Now, though, if you own tech stocks that don't make money, or companies that borrow and borrow to stay in business, cut them loose. Soon enough, all that borrowing is going to get a lot more expensive (read: virtually impossible).

I think, for now, the end of cheap money is the end of the road for the overleveraged froth machines everyone and their brother have been buying with glee for the past 11 or 12 months.

With all that said, this is by no means the end of the road for tech - not at all. I think, tech companies with big ideas and the healthy balance sheets, revenues, and earnings to execute are still going to be making shareholders happy.

WATCH NOW: I'm making my biggest, boldest prediction yet. So big it could change everything. Here...

Every single one of the Big Tech stocks we own is still in the portfolio. Facebook Inc. (NASDAQ: FB), Amazon.com Inc. (NASDAQ: AMZN), Alphabet Inc. (NASDAQ: GOOGL), Netflix Inc. (NASDAQ: NFLX), you name it, and I love it at these levels after a good weeklong sell-off.

I'd buy Microsoft Corp. (NASDAQ: MSFT) all day at $240 - which is where it was about a month ago - and I'm buying even more here at $229.

Every one of these companies is profitable, they have cash on hand, plenty of revenue, and of course, they have earnings. This sell-off on the NASDAQ should be thought of as one big "SALE!" sign when it comes to Big Tech.

That's basically what I told folks on FOX Business Network's "Varney & Co." last week. But as I hinted at earlier, there's no shortage of ways to cash in in a market like this.

There Are Even More Tempting Targets

For one thing, I'm projecting an estimated $353 billion tidal wave of capital may hit five specific technology companies over the next 18 months - I've got more on that here.

The cyclical and inflation-hedged stocks make a lot of sense to me right now, too, being as we are on the cusp of a recovery. It's easy to make money here. Materials, miners, industrials, and commodities, and even, for at least the near future, oil and gas - buy good ETFs with low management fees that track these stocks and average down whenever you can; it's going to be a long, lovely ride higher. Likewise for real estate and real estate stocks. Jump in with both feet.

Gold, silver, and precious metals are going to get in on the fun, too, though they'd be a lot more fun if crypto wasn't stealing their mojo. I wouldn't load up the truck here, but do be a buyer at these levels, and, again, average down if they keep falling (which they're doing because investors are getting margin calls and selling everything, including gold, to raise cash).

The bottom line is, there's no reason to panic - and every reason to have some dry powder ready to go when the market hands us such a rich buying opportunity. Those big moneymakers will be different than the ones we've seen over the past year or so, but they'll be there. So will I.

Right now, I think one of the most interesting of those opportunities could be in five specific technology companies I've been looking at. I think a $353 billion surge of capital is heading straight for them, and could very well hit over the next $18 months. When this much money moves this fast, it's time to pay attention. Here's what everyone needs to know. \

Follow Money Morning onFacebook and Twitter.

About the Author

Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.

The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.

Shah founded a second hedge fund in 1999, which he ran until 2003.

Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.

Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.

Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.

Read full bio