As you know, the stock market has become quite volatile the last few months, and one sector that has been particularly hard hit is technology.
The technology sector includes those companies that make computers, computer components, smartphones, networks and servers, internet-based content providers, social media firms and companies that sell products primarily or exclusively online.
Often referred to as the FANG group, the leaders include Apple, Netflix, Facebook and Alphabet/Google, with Amazon thrown in as well. While these names have all seen double-digit declines since their market highs in October, the question remains as to whether the glory days of double-digit growth are over or merely in hiatus.
Many believe these stocks have a bright future because our use of advanced technologies is still in its infancy. They postulated that technology will continue to evolve (we’ve certainly seen that) both in its capability and application, and our desire for these new features will be as unabated as it has been in the past. So, these companies, and others yet to be created, will continue to apply the lessons they’ve earned in new and exciting ways to improve our lives and our world. If that comes to pass, the recent downturn in these stocks will be but a small blip on an otherwise steady rise in their values.
That said, I suggest these stocks are moving from ones popular with traders looking for a quick profit to ones popular with investors looking for solid long-term growth. Technology companies have not traditionally been considered value buys as futures were less predictable than many blue-chip names and seemed to hinge on every new product announcement or feature improvement.
Our view of this sector may be changing, however, and with it, the base of stockholders may be shifting from the short-term speculators to the long-term growth-oriented investors. That would tend to reduce the volatility in technology stock prices as trading in these shares would be less intense, and that will further enhance the attractiveness of this sector for investors.
So, before deciding that technology is just too unpredictable to own as an investor, consider the benefits of a long view. Those who bought Amazon or Apple a few years ago have seen their investment double or more just by being patient. One word of caution, however, is to always diversify your investments so you are not overly committed to any one stock or sector. That way, the temporary fluctuations in one sector are often offset by contrasting performance in another sector or asset class. Diversifying is always the way to go. Do your own homework and work with a company/individual who has your best interest at heart, such as an Independent Financial Fiduciary.
Frederic “Ric” Schilling is a Florida native, born in Jacksonville, Fl. Ric is President of Senior Guardians of America, a local North Florida firm specializing in tax reduction, long term illness planning, asset protection, probate avoidance and life income planning. Ric is a National Speaker and Advocate on Senior Issues and has been featured by the Florida Times Union and WJXT, TV-4 in Jacksonville as an authority on Estate Planning and Retirement Issues. Senior Guardians has an A+ rating with the Better Business Bureau and is a member in excellent standing with the National Ethics Association. Contact Frederic: 904-371-3302 or 888-891-3381 Please visit: www.seniorguardian.com
This article is not intended to give tax or legal advice. Securities offered through Center Street Securities, Inc. (CSS), a registered Broker-Dealer & member FINRA & SIPC. Investment Advisory Services offered through Center Street Advisors, Inc. (CSA), a SEC Registered Investment Advisor. Schilling and Associates (d/b/a Senior Guardians of America) and CSA are independent of CSS.
