Listen : Audio version of this article
Within the clouds, there is always a silver lining. Such is the case with Blue-chip US as its stocks have started to rise steadily. After a financial crisis in the recent times, it has taken the slow but steady route and climbed as much as 23 percent. So much so, its performance is hailed as the best by S&P 500. Such a large gain has not happened for a sector in recent years.
After the dip in the last quarter, this upward curve has instilled hope among investors as this domain seem to have the possibility to grow on its own instead of policy dependence. The recent hue and cry regarding the decline of this technology seems far away as it continues its stellar performance.
Growth over value
The shift in the very paradigm of business is imminent with a string of changes in policy, decision-making as well as investment. Investors believe in stocks that grow instead of valuable stocks since growth can provide constant capital while value can fall. In fact, they believed that value stocks can get outperformed by growth stocks when charted over a particular time period.
Even if they weaken, they weaken marginally over a short span of time. However, there are cautious steps to be taken as everyone is comparing it with the 2000’s dotcom boom which skyrocketed technology shares overnight. Time will tell if the comparison seems right, but the time is not yet.
A different possibility
In fact, people are refusing to call it a tech bubble since the companies involved in this growth story are companies with spread-out business models that bank on a large sum of capital flow and earnings instead of some innovations only. In fact, some of them were quick to point out that during that famous bubble, the price to earnings ratio for these companies were 65, while it is a mere 21 currently.
However, the growth story has surely brought investors like honeybees to a flower. As much as 13 billion dollars have been invested last year and technology is only trailing behind energy in terms of jump in earnings. Surely, the investment is not going in vain.
Siphoning investments abroad
The weakening of US currency has led to companies seek their future elsewhere and these foreign ventures have proved to be quite profitable for most people. With the dollar index falling 8 percent over the year, surely it is time to seek opportunities elsewhere. In fact, currently, technology has a humongous share of foreign income due to the recent change of fortune. Hence, offshore branches are going to play a pivotal role in determining the share values as well as its growth potential.
In fact, calling these companies simply tech companies will be limiting their scope since these companies have many hands spread across multiple sectors, with some of them not even remotely related to technology. So, it is all about channelling investments properly and helping the stocks grow steadily for the big names of the technology sector.