Technology Investing: From Bust to Boom: A 15-Year Lookback - Ayal Shmilovich
Gerber Kawasaki Wealth & Investment Management
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Technology Investing: From Bust to Boom: A 15-Year Lookback
By: Ayal Shmilovich
Technology Investing: From Bust to Boom: A 15-Year Lookback By: Ayal Shmilovich Last month marked the 15-year anniversary of the stock market bottom during the Great Financial Crisis (March 09, 2009). During this time, technology stocks have been at the forefront of innovation, driving substantial growth and transformation across various sectors of the economy. From the rise of smartphones to the emergence of social media, cloud computing, and now artificial intelligence, the landscape of technology investing has undergone significant opportunities and challenges for investors. In this article, we explore the trends, milestones, and key considerations for investing in technology stocks over the past decade and a half.
The past 15 years have witnessed the ascendance of Big Tech companies. Emerging technologies such as artificial intelligence, blockchain, the Internet of Things (IoT), and renewable energy/electric vehicles have captured investors' attention and driven significant investment flows. Companies operating in these areas have experienced rapid growth, albeit with higher levels of volatility compared to established tech giants.
The technology sector's journey over the past 15 years cannot be discussed without reflecting on the dot-com bubble of the late 1990s. The subsequent crash led to widespread skepticism about technology stocks, but it also laid the groundwork for a more mature and sustainable tech ecosystem. Investors learned valuable lessons about the importance of fundamentals, profitability, and prudent risk management. As a result, the current tech boom appears more resilient and grounded in reality.
What we’ve learned from the past is that despite the potential for outsized returns, investing in technology stocks comes with inherent risks, including volatility, regulatory uncertainty, and disruptive competition. Today’s technology could be tomorrow’s obsolescence. After all, there was a time when the railroad was the most advanced technology. Nonetheless, tech changes at a much faster pace today. Therefore, diversification and risk management are essential strategies for mitigating downside risk. Investors should maintain a balanced portfolio across different sectors and asset classes to cushion against adverse market movements and also invest with the level of risk at which they are comfortable.
While markets have their ups and downs, it’s important to take a long-term perspective. In the short-term, markets can behave erratically, but in the longer run, markets can provide tremendous gains. This has been especially true of tech investing during this time. These are the gains for three indices, not including dividends:
S&P 500:
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Nasdaq Composite: Tech-heavy index:
QQQ – Nasdaq 100 - the 100 largest companies in the Nasdaq-heavy index:
As we look ahead to the next 15 years, technology is poised to continue shaping the global economy and society at large. Innovations such as AI, quantum computing, biotechnology, and space exploration hold the promise of unlocking new frontiers and generating substantial wealth for investors. However, navigating the evolving landscape of tech investing requires diligence, patience, and a long-term perspective. Over the past 15 years, the tech market has been defined by periods of exuberance and hard corrections. Despite the challenges, the sector has delivered remarkable returns for investors who have remained disciplined and focused on the long term. As we move forward, staying abreast of technological advancements, monitoring regulatory developments, and adhering to sound investment principles will be key to unlocking the full potential of technology investing in the years to come. This is why investing in technology has been in the DNA of Gerber Kawasaki since our founding. We realize there is tremendous opportunity for our clients.
Gerber Kawasaki Wealth & Investment Management is an investment advisor located in California. Gerber Kawasaki Wealth & Investment Management is registered with the Securities and Exchange Commission (SEC). Registration of an investment advisor does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Gerber Kawasaki only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Gerber Kawasaki Wealth & Investment Management 's current written disclosure brochure filed with the SEC which discusses, among other things, Gerber Kawasaki Wealth & Investment Management's business practices, services and fees, is available through the SEC's website at: https://www.adviserinfo.sec.gov .
Ayal Shmilovich is a Financial Advisor of Santa Monica, California-based Gerber Kawasaki Inc., an SEC-registered investment firm with approximately ~$2.6B billion in assets under management as of 12/31/23. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss. Readers shouldn't buy any investment without doing their research to determine if the investments are suitable for their situation. “All investments involve risk and one should consult a financial advisor before making any investments. Past performance is not indicative of future results."