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Don’t buy yet – these stocks have further to fall

Techs tumble!

Don’t tell me you aren’t seeing the same headline, or some version of it, everywhere you look. Tech stocks lost a little ground during the week-before-last, quickly recovered, then lost about the same amount last week, although over a longer period of time. The total loss for the hardest hit stocks, such as NVIDIA (NVDA) is about 7%. As for the NASDAQ, (has it officially changed its name to the “tech-heavy-NASDAQ?)” it is down less than 3%. There is a lesson here, and the lesson is that those currently holding tech stocks don’t exactly have a high tolerance for pain.

So why is that a lesson? What does it mean? Well, those who shed the first tears at would have, in another era, been viewed as normal day-to-day stock fluctuation very likely lack the discipline to hold through a serious downturn, and a serious downturn is coming, sure as sunrise. When it comes, they will sell, and a serious downturn will become an even more serious downturn. In other words, this is going to get worse before it gets better.

Unless, of course, you are already in cash to some degree, in which case, it’s going to get better before it gets awesome. Here are some stocks that you shouldn’t buy. While technically, I could tell you to do your own research before trusting what I say, in this case, I’m not actually suggesting that anyone do anything, so I think I’ll throw caution to the wind and proceed sans disclaimer.

Whew! I feel naughty already!

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Julian Close

Julian Close became a stockbroker in 1995. In his 20 years of market experience, he has seen all market conditions and written about every aspect of investing. Julian has also written extensively on corporate best practices and even written reports for the United Nations. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC.