Falmouth Packet Business Nov ’17 – Tech bubble
Tech Bubble? Or just part of our everyday life?
With endless information at our fingertips 24-7, and technology’s advance seeming unstoppable it’s an everyday part of our lives.
Like it or not, the influence of technology on our lives is growing fast. From a financial perspective do we ignore it at our peril?
For the second time in an eventful two decades, US tech giants are at the epicentre of a boom in the sector. Will there be another bust? Growth in the sector looks like it’s here to stay, but vigilance as ever should be taken.
The value of US tech shares recently topped $5 trillion, surpassing the previous boom. The five biggest US companies are all tech stocks, collectively make up 13% of the S&P 500 index. Three of them didn’t even exist 25 years ago.
It’s fair to say that valuations are high, however unlike the previous boom where investors got carried away with unrealistic projections without any real hard evidence to support these; the internet is far more established and a daily part of our everyday lives. A very different story than in the 90’s early 2000’s.
All the big five technology companies have built up significant cash piles that they can use to acquire businesses with expertise, technology or market positioning, helping them accelerate their growth. What is evident is the need to change and develop as technology changes ever more rapidly and avoid becoming quickly outpaced as did Yahoo! and Nokia.
This sector could well pause for breath, or even see a bigger correction after a long period of outperformance. But with the sectors higher than average growth and capacity to benefit from technological change could play an important part to a clients diversified and actively managed portfolio. Such management has the capability to be nimble, managing the upside and protecting against any headwinds.
This article does not provide individual financial advice and are the views of the columnist only. Vision Independent Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority.
Sarah Williams of W.T Independent Financial Planning is an Appointed Representative of Vision Independent Financial Planning Ltd
Article November 2017