After the tech sector's steep upside in 2023, BMO Capital Markets Chief Investment Strategist Brian Belski joins Yahoo Finance Live to evaluate whether ongoing turmoil spells more trouble or overreactions.

While many experts harp on tech valuations, Belski calls them a "terrible predictor of future results." Belski goes on to argue investors should buy when companies embrace prudence like current cost-cutting strategies, asserting "this is exactly when you want to buy."

Belski favors the tech and financial sectors at the moment, but ultimately pushes for broader portfolio diversification: "Own a little bit of everything."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith.

Video Transcript

BRAD SMITH: Well, it's been a tough year for tech so far starting with downgrades on Apple stock as analysts become concerned with the tech giant's iPhone sales. Then we heard from their rival Samsung, who warned of a 35% plunge in profits in its fourth quarter. Now layoffs at Google and Amazon, should investors be worried about the sector?

We've got Brian Belski BMO Capital Markets Chief Investment Strategist. So, should investors be worried at this juncture? I mean, we're only 11 days in to the calendar year here.

BRIAN BELSKI: Yeah, let's just breathe a little bit. By the way, the Smiths were a great band in the '80s. I'm aging myself but, probably, have you heard that joke before or no?

SEANA SMITH: No, that hasn't-- not live on TV. But, yeah.

BRAD SMITH: Yeah.

SEANA SMITH: You know? And Brad plays the drums. So maybe--

BRIAN BELSKI: So there you go.

SEANA SMITH: --he could take after them in the future.

BRIAN BELSKI: No, there's a lot of different calls out there on tech. And our work shows that. Especially, after the type of unbelievable performance we saw in 2022 on the downside and then unbelievable performance on the upside, you have to take a look at two year periods.

And following two year periods like this that we've seen in technology since the Great tech bubble. OK? Typically and historically, 80% of the time, the next year, we see positive returns. That's number one. But I think the most important thing that you're going to talk about all the time on air is valuation, valuation, valuation.

And we have found through our work that valuation actually-- and technology especially is a terrible predictor of future results. And, in fact, we believe if you take a look at all parts of the financial statements, so balance sheets, cash flow, income statement, we've already seen a bit of a pullback in valuations. And tech is not stretched. And we're nowhere near any kind of bubble or froth.