- I own Facebook stock and had the pleasure of watching it plummet.
Is it time to get out? Bigger question - are these tech shares way
more volatile than anyone thinks? - Neil -
Hey Neil - Nothing like watching a single stock drag your whole
portfolio down, huh? Facebook recently took a big drop, and it has
a lot of people asking these same questions.
Personally, I don't think it's time to completely bail, and I definitely
don't think you should panic about tech stocks as a whole. Here are
a few reasons why.
News doesn't determine the value. The news definitely influences
people and can help magnify certain issues, leading to extra buying
and selling of certain stocks. However, that doesn't necessarily
determine whether a company still has value. Facebook is used by
billions of people around the world. Whatever your feelings about
the platform and Facebook's current state of affairs, advertising
dollars are still flowing into the company's coffers and its outreach
isn't slowing down anytime soon. The stock might not recover immediately,
but the internet isn't kicking Facebook out.
2. Tech is pervasive. Information technology and data analytics
are only driving the market further into the digital age. We aren't
about to see a change where people stop liking the convenience of
connectivity and the ease with which we can access anything and
everything. Yes, tech shares have high volatility since online businesses
can be quickly outpaced by the next big thing; however, that doesn't
make them bad investments. There will be ups and downs like with
everything else, but if a company continues providing a useful service
and traffic is steady, you shouldn't be afraid as a shareholder.
3. Keep long-term goals in mind. When companies go through
rough patches, you have to take a step back and look at the big
picture. In some cases, you have to jump ship. Many times, after
a stock "plummets," the price is still higher than where you initially
bought it. The market will continually ebb and flow, and the one
constant is historically sustained growth. So, as you consider retirement
goals and long-term planning, ask yourself: are tech companies going
to be a driving force in the economy, or will something replace
them? From where I'm sitting, I don't see tech stocks fading away
to be cautious and concerned when a company drops like Facebook
did. At the same time, you should try to stay cautiously optimistic
about the market as a whole. Hope this helps, Neil!
© Taylor Kovar
April 13, 2018 column
More "Go Far With Kovar"
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