Many technology exchange traded fund (ETFs) were up yesterday after several companies released stronger-than-expected earnings reports. Intel’s (INTC) third-quarter profit rose 43% on demand for personal computers in Europe and Asia and forecast sales that beat estimates, Michael Patterson for Bloomberg reports. Yahoo (YHOO) rose 8%, and it’s third-quarter net income fell 4.6%, which is less than analysts predicted. Google (GOOG), EBay (EBAY), Microsoft (MSFT) and Hewlett-Packard (HPQ) were other winners in the third-quarter.
Although excitement is returning to the technology sector, some experts warn that the new resurgence resembles the beginning of the dot-com bust. For example, Google, which recently surpassed $600 a share, is now worth more than IBM (IBM), which is a company with eight times the revenue, report Brad Stone and Matt Richtel for The New York Times. In addition, more Internet start-ups are drawing investment based on their ability to build an audience, not bring in revenue, which some say is the formula that led to the inflation and bursting of the dot-com bubble. The lesson for investors to learn here is that even when a sector is experiencing a lot of hype, don’t over-invest in it. For those investors who are considering technology ETFs, below are a few with their performance year-to-date:
- iShares S&P Global Technology (IXN) – up 15.5%
- iShares Dow Jones U.S. Technology (IYW) – up 18.0%
- Technology Select Sector SPDR (XLK) – up 18.6%
- Vanguard Information Technology ETF (VGT) – up 18.3%
- Morgan Stanley Technology ETF (MTK) – up 18.4%
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.