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Which tech investments can weather volatile markets best? Here's what experts say.

Investors worried about 8.5% inflation and anxious about the possibility of a recession this fall may find some bright spots in the tech sector, experts say.

USA TODAY spoke to more than a dozen C-level tech executives about a variety of topics including tech job prospects, a possible recession and what technology investments might be able to weather volatile markets best. That context and knowledge are critical for investors who are looking to put their money into something  solid, reliable and likely to stay stable or grow long term, experts said.

Though each executive had a unique viewpoint, there were some things they could all agree on, and one of those was that a down stock market can offer great opportunities for bargains.

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So what investments do well in inflation?

Kristy Kim, CEO and founder of TomoCredit, a financial technology firm that allows people with no or minimal credit history to build equity, said her business allows her to see which parts of the economy continue thriving even when there is a recession or high inflation.

Financial technology, or fintech, is a part of the tech sector that uses technology like software to solve or help existing financial processes like banking, real estate or accounting.

“The parts of tech that are recession-proof are related to consumers’ essential day-to-day spending,” Kim told USA TODAY.

Another approach if you are looking to invest in something that could be inflation- or recession-proof, is to identify technologies that are must-haves, they said.

Sarah Biller is the co-founder of fintech Sandbox and an executive director of investing firm Vantage Ventures. 

“Fintech is by its nature recession and inflation proof,” Biller said. “We can point to thousands of years of history where financial services adopted the latest ‘technologies’ of the day regardless of the economic climate.”

How to invest in technology

That is especially true for parts of the tech market that help consumers make their lives easier.

When consumers depend on a piece or type of technology that simplifies things they are doing anyway, there is likely to be a smart investment opportunity, said Matt Senter, CTO and co-founder of bitcoin rewards app Lolli.

“Tech products that help consumers save or earn money, manage their finances, or streamline buying necessities are best positioned to weather inflation in the long run,” Senter told USA TODAY.

The inverse is also true: If trendy and fun technology is also expensive and nonessential, people won’t need to buy it. 

That includes things like Apple’s new iPhone 14; ultra-luxe devices like the latest version of a smartwatch; or other gadgets and gizmos that look cool but are more status symbols than critical tools.

“As high inflation puts pressure on consumers’ purchasing power, we’ll see luxury tech products falter while technology that facilitates smart shopping and spending habits will proliferate and thrive,” Senter said.

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Tech investing needs innovation to survive

Diana Lee, CEO and co-founder of Constellation, a digital marketing and software-as-a-service (SaaS) company, said that tech does have one advantage in economically uncertain times: innovation. 

Lee said that because tech continues to grow and evolve, investors have a higher likelihood of putting their cash into products that save people time and money. .

“Right now, people are looking for automated, cost-efficient tools. Overall, if you can cut manpower and become more efficient, people are looking for those solutions because overall, then you’ll be able to save money,” Lee said.

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Kraig Swensrud was the former CMO at Salesforce and is currently the CEO at Qualified, which is the pipeline cloud for Salesforce. He said to think about your tech investment the way a professional tech venture capital or angel investor might.

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“When businesses pull back on spend(ing), is a product mission critical or just nice-to-have?  Swensrud said. “Enterprise software that automates a core process or workflow, such as closing sales, collecting cash, or servicing customers, or helps keep a company secure are typically products that are,” critical, he said.

Sean Harper, co-founder and CEO of Kin Insurance, said that at the very least investors should remember one rule when looking for recession- or inflation-proof companies.

“Companies that are close to profitability, or at least are profitable on a unit basis, will fare better than those who are not,” Harper said.

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No investment is risk-free

Even “bulletproof” businesses like health services and drug manufacturing include segments that ultimately depend on consumers having money – something that they may have less of if inflation continues at high levels and the economy enters a downturn.

“We say that pharma businesses are recession-proof, but that is not true, there are no businesses that are completely recession-proof,” said Lee of Constellation.

“If you can’t pay the copay or if you can’t pay money out of pocket, you can’t afford the drug,” she said. “If a recession hits, it hits everyone all the way around.”