Stocks go up; stocks go down. Tech stocks tend to do those things more extremely than most other stocks. They are volatile because their underlying businesses grow quickly and have become huge. They are subject to consumer preferences and the ebb and flow of innovation and product cycles.
That said, they represent the most dynamic and fastest growing sector of the economy, and technology is not going away. They cannot be ignored.
The recent correction among tech stocks last week was to be expected. They have led the market all year. There is a rolling correction going on throughout the market, and this is a healthy phenomenon. It is far preferable to a major overall correction which can cause unnecessary panic.
We monitor profit/earnings ratios and growth rates carefully. We understand that no stock will go up forever, but also that investors in even the most successful companies must be prepared for some volatility in their stock prices. We also believe that volatility can at least be moderated by investing in suppliers to the tech giants. This flattens the risk with diversification while still participating in the sector.
We see no need for alarm in the recent tech stock pullback, but we remain alert to news from the companies they represent and from government and media sources that may affect their future performance.
For investors with a lower tolerance for volatility than may occur in the Mitchell Capital growth portfolio, which holds a substantial set of tech-related stocks, we also offer value and international portfolios, as well as a managed ETF program and fixed income securities.
Investors in any of these programs should be focused on the long term, and not allow short-term fluctuations to affect their strategy.
Investing in securities involves risk of loss that clients should be prepared to bear.