So far this year, the exposure has been lucrative. The five big tech stocks gained an average of 53%. The median change for all S&P 500 stocks? Negative 5%.
Heavy Hitters
And the expectation that working and shopping from home will be far more common in coming years is one reason why some are confident that big tech stocks are well worth their valuations.
Wedbush Securities raised its price target for Apple on Wednesday to $600 from $515 on optimism about the upcoming 5G iPhone. Oaktree Capital Group co-founder Howard Marks, meanwhile, spent a good portion of a mid-August investment memo reviewing bullish arguments about the valuations of Big Tech companies.
Nevertheless, some financial advisers are nervous about their clients’ mounting exposures. Persuading customers to trim positions “can be a chore” if they will have to pay capital gains taxes, Yorke says.
Advisers are recommending that people hedge or move money into less expensive areas of the market, like small-cap stocks and international stocks.
They’re also hearing from people who are normally conservative but are fearful of being left behind. Wealth manager Kenneth Van Leeuwen of Van Leeuwen & Co., in Princeton, New Jersey, had some clients ask, hopefully, if they owned Amazon. The answer was no, but they do own Apple, which he thinks is a better value, and has a dividend, unlike Amazon.
--With assistance from Lu Wang, Katherine Chiglinsky and Sarah Ponczek.
This article was provided by Bloomberg News.