After an 11% YTD decline in the NASDAQ, many analysts think that technology is now in value territory according to this New York Times column. Their main argument is that the earnings growth forecast for tech companies is too low. American companies have a lot of cash in their balance sheets and the bulls are betting that more of that cash will be spent on technology.
I am agnostic about a recovery in the tech sector. It should be noted that bulls have been predicting a recovery in business spending for years. And tech sceptics note that the average tech stock is still trading at a premium to the market.
My portfolio is heavily oriented towards large-cap, value companies (My biggest position is Altria Group). Since I already work in the tech sector, I am underweight technology in my portfolios. (FD: I own shares in Intel and Nokia). If tech does perform as spectacularly as some bulls expect, I will be participating in it by exercising options and hopefully getting bigger bonuses.
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2 responses so far ↓
1 Big Cajun Man // Apr 25, 2005 at 3:43 pm
Don’t be fooled, High Tech comebacks have been predicted for many years, and I agree, the only way I will be participating in this new “boom” (you know like a bomb makes) will be via options and bonuses (I really hope).
c8j
2 Canadian Capitalist // Apr 25, 2005 at 8:23 pm
I agree. But tech is a valid investment for some people. For a random example look at Yahoo’s numbers:
FY2002: 953m
FY2003: 1625m
FY2004: 3574m
Very few areas of economy where you can get that kind of growth (and busts that compare in scale).
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