Nasdaq Correction: Buy This Unstoppable ETF at a Discount
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The Nasdaq (NASDAQINDEX: ^IXIC) has officially entered correction territory, falling by close to 13% since mid-February, as of this writing. Monday marked the index's worst single-day drop since 2022, as it plunged by 4% -- fueling concerns about a looming bear market or recession.
The future is still uncertain for the market, and nobody knows whether stock prices will rebound or we're headed for a deeper downturn. But over the long term, it's almost guaranteed that the market will recover.
Despite many investors' concerns, right now could be a fantastic opportunity to "buy the dip" and invest while prices are lower, potentially setting yourself up for hefty gains once the market eventually bounces back. If you're looking for a tech ETF to snag at a discount, the Vanguard Information Technology ETF (NYSEMKT: VGT) could be a great buy right now.
The Vanguard Information Technology ETF contains 316 stocks from all corners of the tech sector. With the tech-heavy Nasdaq in correction territory, many of the stocks within this ETF have also been hit hard in recent weeks.
The fund itself has dropped by around 11% since the beginning of the year, while its top three holdings -- Apple, Nvidia, and Microsoft -- have fallen by roughly 9%, 20%, and 10%, respectively, in that period.
Historically, though, this ETF has a strong history of pulling through rough patches. Since its inception in 2004, it's survived the Great Recession, the COVID-19 crash, and the most recent slump throughout 2022 -- all while earning total returns of close to 1,000%.
VGT data by YCharts
In other words, if you'd invested $10,000 in this ETF in 2004 and simply stayed in the market, you'd have around $108,000 by today.
Of course, past performance doesn't predict future returns. There are no guarantees that this ETF will continue thriving over the coming years or that all of the stocks within the fund will recover. But by investing in an ETF, you'll gain exposure to hundreds of stocks at once. That can better diversify your portfolio and limit your risk if the market takes a more severe turn for the worse.
One other advantage of this fund is its mix of blue chip stocks along with smaller companies. Apple, Nvidia, and Microsoft together make up just over 44% of the entire ETF. The other 56%, approximately, consists of the remaining 313 stocks.
Devoting a large portion of the fund toward a handful of stocks can increase risk, but juggernaut corporations are also more likely to pull through tough economic times. While some smaller corporations may struggle during a market slump, they also have more room for explosive growth when prices begin to pick up again.
Periods of volatility are intimidating, and if this slump turns into a wider bear market or recession, your portfolio could take a significant hit. The key to surviving any rough periods, though, is to simply hold on until the market eventually recovers.
In the near term, if the market continues to plunge, this ETF could lose a lot of value. If you sell your investments after prices have already dropped, you could lock in those losses. But by holding your stocks until the market bounces back, whenever that may be, your portfolio is far more likely to pull through unscathed.
Before you buy, then, be sure you're willing to hold any investments for at least a few years. It's also wise to double-check that you have a few months' worth of savings stashed in an emergency fund so that you can leave your money in the market until stock prices recover.
Stock market shakeups can be tough to stomach, but the silver lining is that you can load up on quality investments at lower prices. If you're looking for a tech-focused ETF with a long history of beating the market and recovering from downturns, the Vanguard Information Technology ETF could be a great addition to your portfolio.
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $277,401!*
Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,128!*
Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $467,393!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
Continue »
*Stock Advisor returns as of March 10, 2025
Katie Brockman has positions in Vanguard World Fund-Vanguard Information Technology ETF. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Nasdaq Correction: Buy This Unstoppable ETF at a Discount was originally published by The Motley Fool
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