Oof the tech sector.
I was a last minute fill in on Capital Connection last night on CNBC Europe. I talked about how every so often the tech sector shows a glimmer of hope, the promise of a better tomorrow and then whammy; a kick in the stomach.
I used to understand this sector much better than I do now (talking late 1980s and early 1990s not confusing the late 1990s bubble with being smart). I have been underweight for several years as I have disclosed throughout the blog.
I don't know what will really turn it around and I doubt I will catch the turnaround but I have some exposure, about 2/3 the market weight, so when I do miss the turnaround clients won't be horribly impacted.
I think this sort of thing should ring true for every big sector of the market in a diversified portfolio--maintaining at least a little exposure even to thing you hate because at some point all sectors have their day, all of them.
I will be away from the machine most of the day but will have a normal schedule tomorrow.
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5 comments:
Let me fill you in on understanding the tech sector in the late 90s:
"People are idiots"
The nice thing about the "bumpiness" of tech is that there have been plenty opportunities to buy cheap (if investing for the long term).
I'm a new visitor ... your blog is great. My point: the Nasdaq 100's relative strength to the S&P 500 has certainly turned positive; no doubt because of the weakness in banks and builders etc. But if you accept the fact that long-term yields have changed trend and will continue to rise in the future, isn't technology a place you want to be? (maybe not today, but tomorrow?)
I think that the "tech" sector is misunderstood.
To whit, I have a friend who is a manager at Honeywell. It is an enormous, diversified, international company which has a large installation here in Phoenix. He has educated me about much of the technology and tech companies that they design, buy and use. So, in a major way, a company like that IS a
tech company, which has a large foreign customer base, and is diversified (residential, commercial, aerospace, etc.). The stock is also experiencing a very nice run. Scoot.
From a business perspective, tech is not a great business. The problem is to stay "tech" or cutting edge, you have to continually re-invest in the business unless you're a monopoly/de-facto standard like Microsoft. All those profits, going back into R&D are risky.
And look at the infrastructure Microsoft has built with all that profit. They can't compete in anything that's not one of their monopolies. Zune? Xbox? MSN? ...all rubbish.
Yahoo seemed to be the insurmountable portal, but all their focus on whiz bang ads on their site has led to... negative growth.
Tech is fun. I like it. I try to underweight it.
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