While the concept of investing in tech stocks may seem like a no-brainer in the digital age, this practice continues to polarise opinions among traders and experts alike.

 

While some will point to the notorious dot.com bubble as being indicative of the volatile and unpredictable nature of tech stocks, however, others will highlight considerable gains and the performance of blue-chip companies as reflecting the real opportunities available to investors.

 

In this post, we’ll look at tech stocks more closely and ask whether or not you should invest in them.

 

Investing in Tech Stocks – The Basics

 

We saw a considerable surge in sentiment for tech stocks in the final quarter of 2017, when it was revealed that funds in the IA technology sector had increased in value from £10,000 to a healthy £24,998 in just five years.

 

This is indicative of a growth market, but those who are unfamiliar with tech stocks will know be unsurprised to note that this revelation preceded a sudden and unexpected dip at the beginning of November.

 

Herein lies the conundrum associated with tech stocks; as while they’re capable of delivering significant returns in some instances the market is also prone to violent peaks and troughs. The hyperbole of speculation surrounding the market hardly helps investors, who are often forced to contend with a multitude of diverse options and disproportionately high valuations.

 

It’s also fair to surmise that the more reliable, blue-chip tech stocks such as Google and Amazon (whose share price surged by a staggering 56% in 2017 alone) are prohibitively priced, leaving investors forced to back emerging assets that carry a more significant risk.

 

Should you Invest in Tech Stocks?

 

Clearly, investors who are new to tech stocks can optimise their potential profits by identifying relatively new companies with the potential to achieve significant growth (or ultimately secure a lucrative merger or acquisition). This requires some knowledge of the marketplace and a keen eye for groundbreaking technology, however, and this is respect tech stocks should not necessarily be considered by novice or inexperienced traders.

 

If you are determined to invest in tech stocks, spread betting may be a vehicle that enables you to minimise risk and simplify the proposition. After all, this will allow to speculate about the performance of targeted stock, while negating the burden of ownership and minimising long-term losses.

 

As we can see, there is the potential to make significant gains in the tech stock market, particularly for those who can identify startup and emerging firms with the most innovative and viable propositions. Still, this remains a volatile and risk-laden marketplace, and one that should be approached with caution unless you have knowledge or experience of technology firms.

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March 22nd, 2018 by financetwitter

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