US markets, and in particular US technology stocks, have seen a very large correction in 2022. In addition, there are fears of a US recession, driven by a combination of high inflation, slowing consumer demand, a high base and rising interest rates.

The sharp drops in US technology stocks, need to be seen in the context of the very sharp rally in this space post-COVID. For many (not all) stocks, the correction has largely given up these outsized gains post COVID, and these companies continue to deliver strong long-term returns even post the correction.

Despite the short-term concerns on the US economy & markets, we continue to view US technology as one of the strongest themes for long-term value creation in global markets. This has been seen over the past decade (where these companies have substantially outperformed non-tech peers in terms of growth & earnings), and we do not see this trend reversing in the coming decade. All signs point towards a continued value migration towards technology leaders, and we see these firms continue to deliver fundamental long-term earnings growth.

Volatility (even high levels) in company valuations are a normal part of investing in equities, driven by short-term swings in market sentiment. This volatility in share prices, have little to do with long-term fundamentals, and typically reverse once market sentiment changes.

We believe that US technology is one of the strongest growth themes in global markets (along with India), and we view this correction as an opportunity to be able to participate in this longer-term value creation at substantial discounts to what these firms were available at in CY21.

Given short-term uncertainties, a staggered approach via SIP/STPs may help smoothen out your investment costs over different market levels