The Past and Future for Technical Stocks

by Calvin on October 25, 2021

in Articles

If you’re looking to invest in the stock market, then you should know that the last few years have been a great time for investing in technology companies. The recent boom in technological advances has led to a surge of innovation and new inventions which has created incredible opportunities for investors.

In the past two years, the stock price target in technology stocks has been solid. In August 2016, the NASDAQ hit an all-time high of over 5132 points. This was a great time to invest in tech because nearly every stock on the exchange saw huge gains that year. 

To give you an idea of just how well these companies performed last year, consider this: Apple’s stock went up by 30%, Facebook’s stock went up by 21%, and Google’s stock increased its value by 16%. The trend continued into 2021 with industry leaders like Amazon increasing their stock prices by 40% and Netflix doubling its original investment within 12 months. If you had invested $1000 in Amazon or Netflix one year ago, your investment would now be worth $1300 (an increase of 30%) or $2000 (an increase of 100%) respectively.

The future looks bright for tech stocks as well. As long as consumers continue to demand innovative new products, technological development will stay strong and the companies involved in these developments will perform well on the stock market. Although it’s impossible to predict which companies are going to be successful, investing in technology is a safe bet because more companies are developing new ideas each year. 

Additionally, technological innovation provides consumers with more efficient ways to communicate with one another and conduct business. Since people are constantly looking for ways to save time, they are more willing to pay for convenient services that help them accomplish these tasks, even if it comes at a slightly higher cost. The growing popularity of smartphones and software applications is a great example of this, and it’s one reason why companies like Amazon and Netflix have done so well lately.

One indicator of the success of technology stocks is their performance relative to other sectors on the S&P 500 index, a list of America’s largest publicly traded corporations as ranked by market capitalization. In general, over the past two years, technology stocks have outperformed all other major sectors on this list, including healthcare and financials.

Investor optimism about technological companies was so great in 2012 that, for one week in September, technology companies became more valuable than all other corporations on earth combined. This monumental event occurred even though only 2% of Americans say they would be willing to invest in technology stocks, compared to roughly 20% who would consider these investments today. 

Technology has become such a popular investment vehicle that some analysts are suggesting it may be “time to get greedy when others are fearful” and buy more of these stocks while they’re still relatively cheap (at least by historical standards). If you don’t yet have a good portion of your portfolio invested in these stocks, now may be the time to re-evaluate whether they are right for you.

But what does the future hold for technology companies? 

Technology is constantly changing at an exponential rate, so even if one company comes out with a revolutionary new invention today, that doesn’t guarantee them success for the next few decades. And because humans think and learn so quickly, we may soon create devices that even today’s greatest technological minds couldn’t have imagined. So, if you want to invest in some technology stocks, just remember that it’s smart to be wary of anyone company persisting for more than a few decades.

Some analysts are saying that it will be a great time to invest in these stocks because, as technologies become more commonplace, corporations need faster and faster computers to use their new products. These types of demands could drive computer prices up dramatically, which would be good news for tech companies who could charge even higher premiums. But before you start selling your stock in oil companies and pharmaceuticals to buy shares in Google or Apple, keep in mind that there are several risks associated with investing in technology.

The bottom line? 

Investing in technology is not for the risk-averse. New inventions are cropping up every day, so it can’t hurt to diversify your portfolio with some tech stocks. And while there may be great investment opportunities over the next few years, the future of these companies remains uncertain and volatile. Always remember to do your research before investing.


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