Jun 14, 2017
Tech Sell-Off: A Great Lesson On Why Diversification Is Important
Big reminder: Tech stocks can be volatile, or subject to big swings in their share prices.
Tech stocks have been on fire all year, but they recently took a beating in a recent tech sell-off.
It’s a reminder, experts say, that tech stocks can be volatile, or subject to big swings in their share prices. That’s why it’s a good idea to diversify, and invest in a variety of industries, geographical regions, and categories of businesses. That way your portfolio won’t take as big a hit when a sector has losses.
What the tech sell-off means
Here’s a closer look at what happened last week:
Just five companies caused the big swing, according to Bloomberg. Those stocks are Apple, Microsoft, Alphabet, Amazon and Facebook.
They account for 30% of total weighting of the NASDAQ index. Over the last few days, they were responsible for 75% of the index swing, according to reports.
The biggest loser was Apple, whose stock had fallen by 6.2% percent by Monday, shedding $50 billion of value on concerns about iPhone sales. Google’s parent company Alphabet lost about 4% of its stock value, and $30 billion worth of market cap, and Microsoft lost 3%, or about $17 billion of market cap over the same time period.
Since Monday, the NASDAQ has begun edging up again to regain some of its losses.
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