CHICAGO (Reuters) – Once again the seductive siren call of technology stocks beckons investors. Especially after Apple announced a huge stock buyback Monday along with its first dividend since 1995.
Should you follow that call, or put wax in your ears the way Odysseus’s crew did when they passed the island of the seductive sirens?
There is always a safer course. Sure, technology share returns may be singing a pretty song right now. The S&P North American Technology Sector Index (Total Return) is up about 18 percent year to date through March 16, according to Standard and Poor’s. The sub-index for technology that tracks hardware has risen about 25 percent.
The love affair with Apple products and shares continues unabated. Microsoft is a less sexy offering, but is still relatively ubiquitous in the software world. Along with telecom giants AT&T and IBM, these tech goliaths comprise four out of the top 10 constituents of the S&P 500 index.
Tech is back in such a big way that, with a year to date return of 19.6 percent (as of March 16), it has almost eclipsed the financial services (up 21 percent for the same period) group as the largest single sector within the S&P 500. This pretty much brings tech stocks back to where they were at the height of the dotcom bubble. Is it a mere coincidence that all this happened right around the time the 244-year-old Encyclopedia Britannica went to all-digital editions?