- Many investors are worried about a swift stock market crash and think that the traditionally-risky technology sector will lead the way.
- However, the sector is home to some of the most profitable and successful companies on the planet, bolstered by large allocations to Apple and Microsoft stock.
- Since 1952, the worst single year for these high P/E but profitable stocks was a loss of 40% in 2008, which was about the same as what the market experienced.
- The famous tech crash in the early 2000s was caused by poor returns in unprofitable stocks, and thankfully, today's companies are essential to our lives and look nothing like them.
- VGT does look overvalued and, therefore, should fall more than value stocks in a recession, but it's certainly not worth shunning the sector entirely.
For further details see:
VGT: Why A Tech-Led Crash Is Unlikely