Mortgage The House, Buy Tech Stocks
On Wall Street, one man's loss is often another man's gain. And for investors, if one sector of the market goes bad, you don't hide the money in the mattress, you look for another sector. Since financial companies are taking a pounding over fallout from subprime mortgage investments, everybody's heading for the exits there and pounding on the door of Technology to make their money now. Standard and Poor's Scott Kessler talked to BusinessWeek about this "Tech Stock Summer of Love."
In the last 13 weeks through Aug. 24, the S&P Information Technology index has been the best performer among the 10 sectors tracked by Standard & Poor's, with a gain of 3.1%, vs. a 2.4% drop in the S&P 500 index. And for the year (through Aug. 24), the tech index has climbed 10.2%, beating the 4.3% rise in the S&P 500.
Though Kessler is relatively optimistic about the sector's healthy fundamentals, he's worried that the mess in the financial sector will harm the overall economy and spending on technology products and services (see BusinessWeek.com, 8/27/07, "Tech Stock Oasis: Can It Last?"). That's why he favors a limited number of large companies with proven track records, such as Intel, Microsoft, Oracle, IBM, and EMC.
HotHardware does not have the information available to compare the return on Technology sector stocks to buying Lottery scratch tickets instead of paying your adjustable rate mortgage. We'll have to get back to you.
