If You’ve Invested In Tech Stocks, It Might Be Time To Jump Ship

We love technology stocks, right?  They’ve performed spectacularly over the past nine years. 

But…technology stocks will lead the next stock market crash, much as they did when the dotcom bubble burst.  That’s why investors shouldn’t be tempted to build portfolios with growth stocks or tech stocks…especially now. 

Yes, such stocks have performed spectacularly over the past decade, easily trouncing plain vanilla index funds and indexes comprising value stocks (value stocks are cheap stocks that fewer people want).

But we need to be wary of “spectacular performers” because sectors that defy gravity with rocket fuel eventually fall out of favor (often painfully) as another sector takes center stage.  That other sector will likely be “value stocks.”  Sometimes value stocks beat tech (and other growth stocks). 

Other times, tech (and other growth stocks) beat value stocks.  But–and this might surprise you–value stocks have a long-term record of beating growth stocks over time.  Who knew that something so “not sexy” has outperformed the sexy.

Nobody knows when to jump from “growth” to “value” so it’s best to keep things simple.  Follow one of the model portfolios in my book. Millionaire Expat.  Add money every month or quarter.  Rebalance once a year, if needed.  And don’t mess around.  If you want to read more about the current state of growth and value stocks,

Image by Pixabay

I explained it here in my AssetBuilder column

 


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Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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8 Responses


  1. worlds best value financial advisor

  2. NK says:

    Hi Andrew,

    Would it be wise then to buy a Value index etf instead of an etf that tracks the entire market?

  3. Jen says:

    I don’t understand what a value stock is? I followed what was in your book…sort of like the couch potatoe…the msci awi share ETF, Ftse 100 ETF and a bond ETF…so is that ishares msci awi and Tfse 100 growth funds then? I am now a bit confused.

    • Jen,

      If you followed the strategy in my book, building your portfolio based on the portfolio models I provided, you’re going to be just fine. Keep doing it.

      Cheers,
      Andrew

  4. Jen says:

    Andrew…have you seen one of the latest articles from Sam Imstone from AES in Dubai? He talks about Dfm Dimenional fund management…he has his own money in it he says. Maybe the future will be different…none of us know…and this could be good or not. I am just interested if you have heard of it , know anything about it and if so…do you have any thoughts to share about it? Maybe it is also a ‘tsunami prevention plan’. I am unfortunately just to much of a finance lay person to ….well…understand it.

  5. Guillermo says:

    Hi Andrew,

    Bought and read your book and decided to start investing following one of the simple portfolios examples listed in your book. I am a total newbie so decided to keep it simple. IWDA 55% IGIL 40% and added EIMI with a 5% just to get some exposure to the emerging markets. Everyone seems to be talking about an eminent stock crash.. even though some gurus market readers were predicting the crash from 2015. My question is in the event of a stock crash would it be wise to rebalance the portfolio changing stock bond ratio? Or simply keep it as it is.

    • Hi Guillermo,

      During your lifetime, we will have many stock market crashes. Just ignore all forecasts and stick to your game plan, rebalancing once a year (as needed). You might not think your portfolio is sophisticated, but I can guarantee one thing: You will beat about 90% of professional investors over your lifetime if you stick to your plan. Don’t underestimate the power of simplicity. When combined with discipline and an even-head, it’s a powerful force.

      Cheers,
      Andrew

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