Global technology found.Am I too late?
donmaico
Posts: 376 Forumite
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
Argentine by birth,English by nature
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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.0 -
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 that0 -
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.
ok thank you for that.Based on your advice, I shall ignore them
Argentine by birth,English by nature0 -
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). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
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 1750 -
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
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.htmlArgentine by birth,English by nature0 -
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
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.0 -
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 starsP/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.Argentine by birth,English by nature0 -
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.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.
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.0 -
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.
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.0
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