Tech stocks have been on a huge rally this last 12 months but is this all about to come to the end? This week we seen Google’s stock price fall due to an announcement of a huge fine from European Union on competition of shopping results in their search engine. We are talking billions, but Google is set to appeal.
Amazon also recently announced it was acquiring Whole Foods, in a move away from traditional online retail and a venture into brick and mortar grocery shopping. So is the face value of tech stocks about to crumble? Are these the first signs?
As far as steady investments go, usually most investors look first to stocks on the Dow Jones index, as these have always offered growth and dividend potential, then next you would set aside more speculative funds for investment into Nasdaq 100 stocks. Some of the biggest gains are found here, but they also come with higher risk. You never know what is round the corner in the tech sector.
As an example, Google has fallen almost 10% in value over the last month alone. Wiping billions from the companies value, and investors wealth. The smart long term money may be leaving the party, but this also opens up the door for new money. But at exactly which point the new money will enter the market is simply guess work.
With interest rates set to keep creeping up, investors in general are less motivated to push more money into stocks right now. This will also add fuel to the fire. No doubt over the coming year we will see large blue chips on the Dow Jones begin to fall too. This monetary policy will affect all markets not just tech stocks. But the fall may end up being amplified more on stocks which investors see as higher risk. Hence it’s not the right time to get stuck into speculative investing.
To be safe, it is wise to build a pot of money to be ready to pounce when the dip has finished. It could take a year, maybe even two. But at some point these high valued tech investments will begin to look good value again.