The Hidden Timing Trap Tech Stock Investors Keep Getting Wrong
Written by
Jacob Wade
Edited by
Cory Dudak
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Don’t invest in tech stocks on Mondays.
At least, that’s what the data currently shows. But the data doesn’t always tell the whole story.
Below, we’ll break down the details, showing why Monday’s are worse for tech stocks (on average), but also why you should probably consider ignoring this data. Plus, find out what you can do instead.
Why Mondays Are Worse Than Other Weekdays
Academic research going back decades has found average Monday returns are often lower than other days later in the week. Tech stocks, which tend to be more volatile than the broader market, can exaggerate this effect and see worse returns on down days.
However, don’t necessarily trust this data at face value to make investing decisions. The real reason Monday’s see more down days than other days of the week is because a lot can happen between Friday’s close and Monday’s open.
Companies often release bad news late Friday (often on purpose), and macro events don’t pause for the weekend. When markets reopen on Monday morning, prices adjust all at once, and tech stocks frequently drop more than the overall market.
The “Monday Effect” is not consistent year to year, and sometimes it disappears entirely. Plus, the difference is usually tiny compared with normal daily volatility. If you’re looking to time the market and give yourself a rule of “never buy tech stocks on Mondays,” you might end up missing out.
The Actual Worst Days To Buy Tech Stocks
Tech stocks are more volatile than other types of stocks, and while it might be tempting to try and find a day of the week to avoid, it’s less scientific than that. It’s more about poorly-timed investing based on financial news.
Tech stocks are more vulnerable to news cycles than days of the week. A flashy product launch, AI announcement or viral earnings headline can send prices soaring quickly. But if you buy a tech stock right after that kind of move, it often means paying a premium price and losing upside.
Of course, it can be just as risky to buy right before a big news event, especially if you’re not prepared for volatility. For example, if you buy a stock the day before an earnings report, even strong companies can drop 10% or more on solid results if expectations were too high.
The most common mistake of all is waiting for the “perfect” day when a stock is falling in price. Some of the market’s best days occur during periods of fear for investors, while some stocks have the biggest gains right after one of the worst days. Investors who stay on the sidelines and wait until a stock feels ‘stable’ will more likely end up buying later at higher prices.
How (and When) You Should Invest in Tech Stocks
If you’re considering buying tech stocks, there are smarter ways to invest without pretending you can outsmart the calendar:
- Dollar-Cost Averaging (DCA): The simplest approach is known as dollar-cost averaging. This means purchasing a stock on a regular schedule, spreading purchases over several weeks or months to “average in” to a stock position. This takes timing out of the equation, and allows you to buy at different price points over a period of time.
- Diversify Your Holdings: Instead of going all-in on a single tech stock, pick several. If you simply want exposure to the tech sector, consider investing in a tech stock ETF instead. This gives you instant diversification and can spread your risk across multiple stocks.
- Create Investing Rules for Yourself: Before the market opens, set some rules on what price you’re willing to pay for a stock (and stick to it). Using limit orders in your brokerage app can help you set a concrete price and avoids emotional investing.
- Keep an Eye On Interest Rates: Tech stocks are especially sensitive to interest rate movement from the Federal Reserve. If the Fed is expected to lower rates, tech stocks may get a boost. However, if they unexpectedly hold rates, or raise them, your stock picks could drop significantly.
- Plan for Volatility: Bad days will happen. If you believe in a stock, you will need to have a plan for when they arrive. Ask yourself how you’ll respond if a position drops 15% or 20% in a short period of time. Will you buy more, hold or reassess? Having that answer ahead of time prevents panic decisions that lock in losses.
The Bottom Line
Yes, Monday has the strongest reputation as a weaker day for tech stocks compared to other trading days. But that data without proper context shouldn’t inform your investing decisions.
The real worst day to buy tech stocks is the day you let fear or indecision drive your decisions. Investors who focus on having an investing strategy, staying diversified and staying disciplined tend to outperform those who chase perfect timing.
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