Investing in Technology Stocks
by
Gregory Grant
Trading on the Nasdaq has been reaching skyward in recent years. In 1998, investors traded 5.8 billion dollars of shares on the index, up 28 percent from the year before. The index is heavily comprised of high tech companies. So the tech sector's freefall of this past spring sent the index spiraling downward with it.
But the Nasdaq has come back with the recovering tech sector. And experts say tech stocks remain a strong sector for investors to consider.
"With more of the world's population coming into play within the tech environment, there's still a lot of growth long-term to come," said York Harris of Merrill Lynch. "There's still a lot of volatility to come and it's very important still to do your homework but there's a lot of opportunity out there."
Consultants say investors should study the fundamentals of a company before investing.
"On the fundamental side, you want to look at management, the depth of that management, do they dominate the industry, are they number one, two or three?" Harris said. "Do they have a high level of R&D going on to ensure their future will also allow them to remain dominant in their field?"
Potential investors should also look at the technical side of a company - check stock performance, quarterly earnings and revenues.
Financial consultants say the key to investing in the tech sector, or any sector, is education. Investors who look for solid fundamentals and future growth are more likely to be rewarded.
In recent years, companies have flocked to the web to set up dot.com sites. Initially retail companies caught the attention of investors and consumers alike.
When to sell a stock is as important as when to buy a stock. The investor that goes beyond just looking at the financial pages will find that this kind of in-depth research will pay off in helping to make wiser investment choices.