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  • FIRST POST
    • donmaico
    • By donmaico 10th Jan 18, 10:31 PM
    • 313Posts
    • 38Thanks
    donmaico
    Global technology found.Am I too late?
    • #1
    • 10th Jan 18, 10:31 PM
    Global technology found.Am I too late? 10th Jan 18 at 10:31 PM
    I can't find any threads regarding Global Tech funds and I was wondering why. I have a very cautious portfolio and thought about investing in tech fund as well just to pep things up a bit but the obvious lack of enthusiasm here got me wondering if they are considered far too risky
    Last edited by donmaico; 11-01-2018 at 10:17 PM.
Page 1
    • Linton
    • By Linton 10th Jan 18, 11:05 PM
    • 8,866 Posts
    • 8,907 Thanks
    Linton
    • #2
    • 10th Jan 18, 11:05 PM
    • #2
    • 10th Jan 18, 11:05 PM
    Very high risk area subject to booms and busts and unrealistic valuations. Look back in history - generally speaking those companies that develop a technology dont last long. People buy shares in unprofitable companies on the hope for the future but the companies often go bust because technical whizz kids dont necessarily make good company managers or have the ability to create money-making products. The few really successful tech companies mostly get bought out by the big players who reap the rewards and then discard the pioneers.

    AI has been impending for the past 40-50 years. If it's successful I predict it will just become a routine part of everyday products, not a vast opportunity for wealth generation.

    5-10 years is too short a timeframe for this type of investment, at least as a significant part of one's portfolio. You could make a packet but you could equally well lose one and you may not have time to recover. If you nevertheless want to buy a focussed tech fund I suggest you keep it at say 5-10% of your portfolio and cream off profits keeping the % constant.
    • firestone
    • By firestone 10th Jan 18, 11:35 PM
    • 108 Posts
    • 40 Thanks
    firestone
    • #3
    • 10th Jan 18, 11:35 PM
    • #3
    • 10th Jan 18, 11:35 PM
    seems like you have picked the Fidelity fund which without looking up the details i seem to think gets picked by others quite a bit.Polar Capital always seems in the mix & Scottish Mortgage tends to have a tech heavy leaning and there are good Biotech funds as well
    Even the L & G tech index fund has done well and if you like A.I there are now ETF's for that
    • donmaico
    • By donmaico 10th Jan 18, 11:36 PM
    • 313 Posts
    • 38 Thanks
    donmaico
    • #4
    • 10th Jan 18, 11:36 PM
    • #4
    • 10th Jan 18, 11:36 PM
    Very high risk area subject to booms and busts and unrealistic valuations. Look back in history - generally speaking those companies that develop a technology dont last long. People buy shares in unprofitable companies on the hope for the future but the companies often go bust because technical whizz kids dont necessarily make good company managers or have the ability to create money-making products. The few really successful tech companies mostly get bought out by the big players who reap the rewards and then discard the pioneers.

    AI has been impending for the past 40-50 years. If it's successful I predict it will just become a routine part of everyday products, not a vast opportunity for wealth generation.

    5-10 years is too short a timeframe for this type of investment, at least as a significant part of one's portfolio. You could make a packet but you could equally well lose one and you may not have time to recover. If you nevertheless want to buy a focussed tech fund I suggest you keep it at say 5-10% of your portfolio and cream off profits keeping the % constant.
    Originally posted by Linton
    ok thank you for that.Based on your advice, I shall ignore them
    Argentine by birth,English by nature
    • dunstonh
    • By dunstonh 11th Jan 18, 12:10 AM
    • 90,406 Posts
    • 57,190 Thanks
    dunstonh
    • #5
    • 11th Jan 18, 12:10 AM
    • #5
    • 11th Jan 18, 12:10 AM
    What puzzles me is that I can't find a single thread which deals with this sector despite the fact these funds appear to be very strong at the moment.
    Take TARDIS back to 1999.

    .I know they are risky but surely they must be worth at least a punt unless it is now too late to jump on board and they are more likely to go south again.
    It is a specialist niche sector. They always have their day and they always come back down with a bump. That is why they are worth 5% of your portfolio but any more than that and you are ramping the loss potential up significantly.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Prism
    • By Prism 11th Jan 18, 1:29 AM
    • 125 Posts
    • 86 Thanks
    Prism
    • #6
    • 11th Jan 18, 1:29 AM
    • #6
    • 11th Jan 18, 1:29 AM
    I disagree with the others. I think tech is still fairly priced. The cloud and AI are generating huge amounts of money. 20% of all cash that goes into US index funds goes into tech.

    Global tech has a lower PE than the s&p 500 so if you are concerned about valuation and you think tech is too expensive then you shouldn't buy US stocks at all really. This is nothing like the dot com bubble. The PE of the Nasdaq at that time was 175
    • donmaico
    • By donmaico 11th Jan 18, 8:11 AM
    • 313 Posts
    • 38 Thanks
    donmaico
    • #7
    • 11th Jan 18, 8:11 AM
    • #7
    • 11th Jan 18, 8:11 AM
    I disagree with the others. I think tech is still fairly priced. The cloud and AI are generating huge amounts of money. 20% of all cash that goes into US index funds goes into tech.

    Global tech has a lower PE than the s&p 500 so if you are concerned about valuation and you think tech is too expensive then you shouldn't buy US stocks at all really. This is nothing like the dot com bubble. The PE of the Nasdaq at that time was 175
    Originally posted by Prism
    I'll keep an open mind but I was thinking more in terms of risk and future growth, rather than the cost of each unit or ongoing charges.As for PE being lower than the s&p 500, I cant say I really understand all that.I read here that it is not necessarily a good thing, just depends on which one- https://www.cnbc.com/2016/03/09/why-a-low-price-to-earnings-ratio-isn't-always-a-good-thing.html
    Last edited by donmaico; 11-01-2018 at 8:45 AM.
    Argentine by birth,English by nature
    • economic
    • By economic 11th Jan 18, 9:50 AM
    • 2,503 Posts
    • 1,341 Thanks
    economic
    • #8
    • 11th Jan 18, 9:50 AM
    • #8
    • 11th Jan 18, 9:50 AM
    I'll keep an open mind but I was thinking more in terms of risk and future growth, rather than the cost of each unit or ongoing charges.As for PE being lower than the s&p 500, I cant say I really understand all that.I read here that it is not necessarily a good thing, just depends on which one- https://www.cnbc.com/2016/03/09/why-a-low-price-to-earnings-ratio-isn't-always-a-good-thing.html
    Originally posted by donmaico
    P/E ratios alone are mostly irrelavant in making decisions about investing. For a start no growth in earnings is considered in a P/E ratio. Some of my best performing stocks - amazon and nvidia - had a very high P/E ratio at the time I bought them and even though they still continue to have high P/E ratios, I am holding as I love these names long term. Earnings have been growing a lot.
    • donmaico
    • By donmaico 11th Jan 18, 10:17 AM
    • 313 Posts
    • 38 Thanks
    donmaico
    • #9
    • 11th Jan 18, 10:17 AM
    • #9
    • 11th Jan 18, 10:17 AM
    P/E ratios alone are mostly irrelavant in making decisions about investing. For a start no growth in earnings is considered in a P/E ratio. Some of my best performing stocks - amazon and nvidia - had a very high P/E ratio at the time I bought them and even though they still continue to have high P/E ratios, I am holding as I love these names long term. Earnings have been growing a lot.
    Originally posted by economic
    Those are individual holdings .I guess it depends on how willing one is to take risks and how much further up the ladder those holdings are likely to go. I am in a bit of a quandary.I might take a small punt ie 10% of my portfolio but it would depend on the fund.I see Lionheart UK small companies comes with good recommendation ie 5 stars but that is focussed on one country whereas Henderson Global tech is more spread out but only gets 3 stars
    Argentine by birth,English by nature
    • IanSt
    • By IanSt 11th Jan 18, 11:06 AM
    • 209 Posts
    • 160 Thanks
    IanSt
    I am in a bit of a quandary.I might take a small punt ie 10% of my portfolio but it would depend on the fund.
    Originally posted by donmaico
    Given that you've shown at least one instance of selling out when prices are low, you really need to consider whether your funds and contributions are consistent with your needs (both now and the future) whilst still allowing you to go to sleep at night.

    So before changing any funds have a really good look at what you need to get from your portfolio and whether you have the ability to see a uk smaller company fund falling perhaps 40 to 50 percent without selling out.

    It may be that your portfolio perfectly meets your needs, but it may be that you either do need to increase the equity percentage of your funds or keep the portfolio and increase your contributions and/or reduce your expectations.
    • Prism
    • By Prism 11th Jan 18, 12:39 PM
    • 125 Posts
    • 86 Thanks
    Prism
    P/E ratios alone are mostly irrelavant in making decisions about investing. For a start no growth in earnings is considered in a P/E ratio. Some of my best performing stocks - amazon and nvidia - had a very high P/E ratio at the time I bought them and even though they still continue to have high P/E ratios, I am holding as I love these names long term. Earnings have been growing a lot.
    Originally posted by economic
    I totally agree. I never really look at P/E's of individual stocks when choosing funds or stocks. A high P/E typically simply means an assumption of future growth. However I do sometimes check the average P/E of an index fund to determine if an entire sector or region is highly priced or not. Just a form of sanity check really. So from my previous example in this thread, to help answer a question like 'is tech overpriced?' or 'is tech in a bubble' I compared the P/E of my index fund of global tech stocks to that of other index funds. At this time it can be seen that tech is priced more cheaply than healthcare for example, even though tech is up about 70% over the last two years. Tech is cheaper than the average of the S&P 500 even though 20% of that index is made up of those same tech stocks.

    This can help make a decision as to if you should buy or cut back on certain sectors or regions but certainly not be the main driving reason for owning a stock or fund. I would never buy a stock or fund just because its cheap - there it a reason its cheap usually. Anyone that is a value based manager and uses stats like P/E primarily is basically assuming they are wiser than the rest of the market.
    • donmaico
    • By donmaico 11th Jan 18, 1:46 PM
    • 313 Posts
    • 38 Thanks
    donmaico
    I'll rewrite this post but without too much detail. This is my plan
    My intention is to build a nest egg which I can use as and when required.
    I will be officially retired this year but will continue working for the next 5
    I will be making contributions to 5 multi funds that I have which are of a cautious variety. Unfortunately, despite having made good growth in previous years, they seem to have stalled somewhat and are now performing below the Footsie 100.
    The portfolio consists of 35% stock invested across the globe including the UK, 51% bonds and the rest cash and something called "other"

    Given the mediocre performance , which averages 4%, over the last year since I took this particular investment portfolio I am looking to make some changes which include changing one or two( maybe more) of the multi-funds and adding another which is a rather more risky ie a Global tech fund or something like Lionheart Uk smaller companies
    When the 5 years are over I intend to end making contributions to the multi-funds and just sit on them until I need to access them. The tech fund, though, I would continue making contributions into it until such time I feel it prudent not to do so
    Last edited by donmaico; 12-01-2018 at 6:56 AM.
    Argentine by birth,English by nature
    • economic
    • By economic 11th Jan 18, 1:56 PM
    • 2,503 Posts
    • 1,341 Thanks
    economic
    I totally agree. I never really look at P/E's of individual stocks when choosing funds or stocks. A high P/E typically simply means an assumption of future growth. However I do sometimes check the average P/E of an index fund to determine if an entire sector or region is highly priced or not. Just a form of sanity check really. So from my previous example in this thread, to help answer a question like 'is tech overpriced?' or 'is tech in a bubble' I compared the P/E of my index fund of global tech stocks to that of other index funds. At this time it can be seen that tech is priced more cheaply than healthcare for example, even though tech is up about 70% over the last two years. Tech is cheaper than the average of the S&P 500 even though 20% of that index is made up of those same tech stocks.

    This can help make a decision as to if you should buy or cut back on certain sectors or regions but certainly not be the main driving reason for owning a stock or fund. I would never buy a stock or fund just because its cheap - there it a reason its cheap usually. Anyone that is a value based manager and uses stats like P/E primarily is basically assuming they are wiser than the rest of the market.
    Originally posted by Prism
    yeh exactly.

    I only see a purpose of managed funds for growth stocks. for value/income stocks i do not see the point of a managed fund as you can just generally buy single stocks easily for value by looking at dividend yield, p/e, dividend cover etc. you save on management charges which is what you want as you are looking for income! basically i rather pay management fees for expertise in stock selection for growth then value. there is a lot more upside! so the fee is worth paying.

    my portfolio has a mixture of managed funds (for growth), index trackers (for stability as it includes both value and growth), single tech stocks (i am still VERY bullish on tech) and single name value stocks (for cash flow income generation and some upside). total value is over 300k across pension, isa and normal trading.

    when you built up a nice portfolio its like a machine.
    • Glen Clark
    • By Glen Clark 11th Jan 18, 3:31 PM
    • 3,970 Posts
    • 2,972 Thanks
    Glen Clark
    Whenever new things have come out, even going back to the canals, and the railways, there has aways been a mania of new investors pouring money into anything associated with it.
    Nearly all the companies that started out in it went bust.
    Others came along later, sought out the best of those that were struggling under a mountain of debt, bought their assets at a knockdown price, and went on to be successful.
    “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair
    • BananaRepublic
    • By BananaRepublic 11th Jan 18, 4:28 PM
    • 1,053 Posts
    • 774 Thanks
    BananaRepublic
    AI has been impending for the past 40-50 years. If it's successful I predict it will just become a routine part of everyday products, not a vast opportunity for wealth generation.
    Originally posted by Linton
    AI is in use all around you. Do you use Siri on an Apple device? That is AI. Amazon Echo? That is AI. Voice recognition when doing phone banking? That is AI. Other examples include search engines, video games and fraud prevention tools used by banks.
    • Linton
    • By Linton 11th Jan 18, 5:19 PM
    • 8,866 Posts
    • 8,907 Thanks
    Linton
    AI is in use all around you. Do you use Siri on an Apple device? That is AI. Amazon Echo? That is AI. Voice recognition when doing phone banking? That is AI. Other examples include search engines, video games and fraud prevention tools used by banks.
    Originally posted by BananaRepublic
    mmm you can claim it is. Perhaps if the bank's voice recognition system used identical software to Siri but had just been trained differently I might be a bit more convinced. Or perhaps if it heard me becoming agitated it showed some sympathy. AI perhaps is a bit like magic where once you can see how it's done it ceases to be magic.

    More importantly to us on MSE - Do you think it has provided a lucrative investment?
    • donmaico
    • By donmaico 11th Jan 18, 5:55 PM
    • 313 Posts
    • 38 Thanks
    donmaico
    Given that you've shown at least one instance of selling out when prices are low, you really need to consider whether your funds and contributions are consistent with your needs (both now and the future) whilst still allowing you to go to sleep at night.

    So before changing any funds have a really good look at what you need to get from your portfolio and whether you have the ability to see a uk smaller company fund falling perhaps 40 to 50 percent without selling out.

    It may be that your portfolio perfectly meets your needs, but it may be that you either do need to increase the equity percentage of your funds or keep the portfolio and increase your contributions and/or reduce your expectations.
    Originally posted by IanSt
    just peace of mind in my retirement ie a nest egg which I can use if and when necessary
    Argentine by birth,English by nature
    • dividendhero
    • By dividendhero 11th Jan 18, 6:01 PM
    • 138 Posts
    • 111 Thanks
    dividendhero
    Even folk who specialise in the field of tech companies can't identify the winners...therefore I'm out
    • donmaico
    • By donmaico 11th Jan 18, 6:18 PM
    • 313 Posts
    • 38 Thanks
    donmaico
    Even folk who specialise in the field of tech companies can't identify the winners...therefore I'm out
    Originally posted by dividendhero
    there are no certainties and I guess it depends on our willingness to take risks using other people's "expertise"
    Argentine by birth,English by nature
    • Prism
    • By Prism 11th Jan 18, 6:56 PM
    • 125 Posts
    • 86 Thanks
    Prism
    More importantly to us on MSE - Do you think it has provided a lucrative investment?
    Originally posted by Linton
    The companies which benefit the most from AI are the usual suspects - Apple, Microsoft, Google, Facebook and Amazon. They are using AI heavily in their own processes (Like login security) and also turning it into something they can sell to other businesses and consumers through their cloud platforms. Partly the reason they are doing so well right now
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