Why Now May be a Good Time to Invest in Technology Stocks
The toll of the dollar on the US tech sector has not been as heavy as extolled. This sector continues to display strength, especially mature companies, and investors need not fear an exogenous shock like the tech bubble burst of 2000.
Although the valuation multiples for the tech sector are higher than its historical averages, the prices are supported by robust earnings growth.
The primary reason for tech strength is the fact that most tech giants have effective currency hedging techniques in place.
Despite the currency headwinds plaguing the sector, technology has managed to register a revenue growth rate of 5.5%, second only to healthcare , among all the S&P 500 sectors.
The US technology sector was expected to be be the worst hit due to the rise of the dollar, as almost 60% of its revenues are estimated to come from abroad. This is more than any other sector in the S&P 500.
Attracting foreign investment has been key for the Modi government in its first year, particularly given all those visits abroad. This is a step in the right direction.
How have India-focused ETFs fared in attracting global investors’ attention? If we consider investments for 2015 year-to-date, five India-focused ETFs made it onto the top ten list.
It appears that Modi’s trips abroad are working, and that his schemes and plans have attracted foreign direct investment into the country.
India’s fiscal deficit has no direct bearing on India-related ETFs (INDY) or broader ETFs with exposure to India, such as the Schwab Emerging Markets Equity ETF (SCHE).
The Reserve Bank of India is the US Federal Reserve’s counterpart that conducts monetary policy in the country. And the repo rate is akin to the federal funds rate in the US.
Manufacturing, the biggest component part of industrial production in India, increased by 2.3% in the fiscal year ended March 2015.
Better irrigation facilities would mean more crop production. Lower food prices would ultimately reduce the pressure on monetary policy.
Consumer prices have come down, with the CPI rising by just 4.9% in April 2015, compared to 8.5% a year ago. Yet food inflation shot up to 5.7% in April 2015.
Not only has consumer price inflation come down, it has seen changes as well. The base year for CPI calculation was changed from 2010 to 2012, making readings more relevant.
The Indian economy has certainly seen a change since the new government took over. India now uses what is known as GVA (gross value added) to calculate economic output.
Modi promised systemic changes in the way India goes about its business. These changes, he assured, would get India to its deserved place in the world—socially and economically.
Treasuries are a critical part of a portfolio, as they add great diversification benefits.
Diversification is key to achieving risk and return goals. Adding a low yield, less volatile security adds value to a portfolio.
The role of low yielding securities in a portfolio is to decrease risk and stabilize earnings.
Within fixed income securities, there are two main types of risks: interest rate risk and credit risk.
But if I knew how to manage my portfolio safer and smarter than most hedge fund managers, I could realistically grow my wealth.