£10,000 invested in the Nasdaq at the start of 2025 is now worth…

April has been a rough month for most US stocks, but the Nasdaq Composite index was particularly hit hard. As home to many high-flying tech stocks, the index saw a sharp correction in lofty valuations as tariffs were unveiled to the world. And while the index has since recovered some of these losses, the year-to-date performance is still in the red.

In fact, if an investor had bought £10,000 worth of shares in a Nasdaq Composite tracker fund at the start of 2025, they’d now have around £8,750 – a painful £1,250 loss in the space of just a few months. The loss would have been even greater for investors who panic-sold in the days following the US ‘Liberation Day’ at around £2,000.

But with the markets seemingly calming down, could buying Nasdaq stocks today unlock superior investment returns in the long run?

Volatility’s likely not yet over

Looking across the Nasdaq, there are still plenty of tech stocks trading at a lofty valuation even after the recent slide. In some cases, paying a slightly cheaper premium may be a sensible move in the long run. However, premium-priced stocks are often some of the most heavily affected by volatility. And while markets have indeed calmed in recent weeks, we’re not out of the woods yet.

A new trade war with China’s now underway. And a return to massive sweeping tariffs is only a couple of months away if countries and regions don’t come to a new arrangement with the US. Both of these are catalysts for uncertainty. So while stocks might have stabilised for now, another slide could emerge as we approach the tariff pause deadline.

With that in mind, it’s not so surprising that The Economy Forecast Agency has projected the Nasdaq Composite index could fall a further 24% by July this year!

Investing during volatility

There’s no guarantee that stocks will fall further moving forward. After all, if the geopolitical trade environment suddenly improves, US stocks will likely continue their upward recovery streak. But assuming further declines will materialise, the timing of this drawdown remains unknown.

As such, the most prudent approach to capitalising on such volatility is likely through a dollar cost-averaging buying strategy. That’s especially appropriate for businesses whose impact from tariffs may take a while to materialise.

Take Wix.Com (NASDAQ:WIX) as an example. The online website builder service and e-commerce platform have achieved tremendous growth in recent years. In fact, over the last half-decade, revenue has expanded by an average of 12% a year, and profits even began to emerge in 2023.

The bulk of this stems from customer subscriptions. However, in the long run, the primary source of income likely won’t be subscriptions but transactions of online purchases moving through its platform. Right now, transactions only account for around 12% of sales. But as we’ve already seen with its larger peer Shopify, that could quickly change.

As transaction revenue becomes a more prominent part of the business, Wix’s sensitivity to economic cycles and potential recessions increases. After all, lower consumer spending means fewer online transactions. Even today, a weak economy could be a headwind as demand for new websites from businesses and individuals falls — a risk that investors must consider before jumping in.

The post £10,000 invested in the Nasdaq at the start of 2025 is now worth… appeared first on The Motley Fool UK.

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report — 5 Shares for the Future of Energy — and discover:

Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
How to potentially get paid by the weather
Electric Vehicles’ secret backdoor opportunity
One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

More reading

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Wix.com. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.