Is It Too Late for Beginner Investors to Ride the Big Tech Bull Run?written by Bella Palmer
The big US tech stocks, referred to collectively as the ‘
Despite a correction over the second half of March, by early April big tech had resumed its seeming unstoppable ascent in value growth. Trade war fears over June powered values to new highs as
Any new investor who relied on the NYSE’s Fang+ index to kick start their online investing career in June wouldn’t have been disappointed. It’s returned almost 10% since the start of the month – more than enough to count for a good full-year return. That compares to a gain of less than 2% across the S&P 500 US benchmark index. Without the Fanngs, the S&P 500 would be down for the year to date.
But is there much left in the tank? Quoted in the Financial Times, State Street Global Advisors chief investment strategist Michael
“The group has become for investors [a] safe investment with growth characteristics.
However, he also cautions that we may be entering a period that shows greater divergence within the group’s prospects than has been the case in recent months. In June Apple has lagged the rest, down 0.8%. Netflix has gained 18% over the same period.
Some analysts fear that big tech is now entering the ‘
“The smart money is heading for the exits while Mom and Pop are loading up on tech at lofty valuations”.
The problem with a melt up phase of a bull cycle is that while there is the danger of getting caught near the top as a new investor, there are good returns to be made while it’s still in process. Gains are often at their fastest rate at this point. Which makes it a tricky call for beginner investors. If there are several months left in tech growth, which may be particularly likely if trade war and other geopolitical fears continue, it may not be too late. However, there is also the danger of buying
The best case scenario would be buying in for a few months, recording a quick boost and selling before a correction. But as any beginner investor will learn, trying to time the market in this way is very difficult.
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