The tech rally is dead!
Long live the tech rally!
In an article I penned yesterday, I shared 3 of my favourite Warren Buffett investing adages. I won't rehash all of that today.
But part of one of Buffett's investing pearls is that you should think long-term, and ignore the ups and downs. That's great advice. Not only will you sleep better, you'll almost certainly make more money in the share market over time.
What got me thinking about this particular Buffett mantra was an article in Bloomberg yesterday. One which wholly ignored this advice, and may well have scared some trigger-happy investors into selling their shares in big technology companies like Facebook, Inc. (NASDAQ: FB) and Amazon.com, Inc. (NASDAQ: AMZN).
Here's the relevant excerpt from the Bloomberg article:
An oddity is occurring as the stock market grinds back to an all-time high: Big tech is getting left behind.
A risk-on rotation rippling across markets has the tech-heavy Nasdaq 100 flirting with a third straight loss — which would be its longest slide since March…
Risking hypocrisy…
At risk of hypocrisy by focusing on the daily moves here, I can't help but point out that yesterday (overnight Aussie time) the NASDAQ-100 (INDEXNASDAQ: NDX) gained 2.6%. That puts the Nasdaq 100 — comprised of the 100 largest companies on the broader tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) — less than 1% below last Thursday's all-time high.
And some of the biggest of the big tech shares led the way. Amazon's share price gained 2.7%. And Facebook's share price closed up 1.5%.
Perhaps the biggest story in the big tech space is Tesla Inc (NASDAQ: TSLA).
Following its announcement for a planned five-for-one stock split, the Tesla share price rocketed 13.1% by Wednesday's closing bell in US markets. In after-hours trading, Tesla shares are up another 0.7% at time of writing. And this is a company with a US$290 billion (AU$406 billion) market cap we're talking about.
Year-to-date, the Tesla share price is up 261%. And if you'd bought Tesla shares back on 2 July 2010 you'd be sitting on a gain of 7,998%.
Pity the short sellers!
ASX tech share prices soaring
It's not just the US tech companies seeing their share prices rocket.
Australia's leading tech shares leapt out of the starting gate this morning, continuing their march higher.
Now obviously not every ASX tech share is seeing its share price rocket. But a look at this morning's performance of the BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) gives us a good indication of how the sector is performing.
And with ATEC's share price up 1.3% at the time of writing, it looks to be doing quite well.
If you're not familiar with ATEC, the exchange traded fund (ETF) holds some of Australia's largest tech companies. It only recently began trading on the ASX, launching on 6 March. You're probably aware that wasn't the best time to launch a new ETF, as the broader market was in freefall at the time. And indeed, ATEC's share price fell 34% by 23 March.
Reflecting the strength of the Australian tech companies it holds, ATEC's share price is up 86% since its 23 March low. That's easily enough to cover its losses from its first few weeks, with the share price now up 22% since its inception.
That's the broader market.
Now let's focus in on one of the ASX's shining tech stars. Namely, Whispir (ASX: WSP).
Whispir is a software-as-a-service (SaaS) company. It provides a communications workflow platform for businesses to automate their interactions with customers and other stakeholders. A service that's clearly seen booming demand in the age of social distancing and remote working.
In intraday trading, the Whispir share price is up 3.8%. Year-to-date the share price is up more than 160%. And that comes despite its precipitous share price plunge of 56% from 21 February though 23 March. If you were lucky enough to buy shares on 23 March, by the way, you'd be sitting on a gain of 472% today.
Whispir's sky-high potential wasn't lost on the Motley Fool's own Anirban Mahanti. He recommended members of his Extreme Opportunities service buy shares of Whispir back on 11 September 2019, less than 3 months after it started trading on the ASX.
Members who followed Anirban's advice and bought shares at $1.41 would, at time of writing, be sitting on a gain of 186%. That is if they kept their focus on the long-term and didn't join in the panic selling in February and March.
With all the recent share price gains in technology shares, you'll hear some bears saying they couldn't possibly go much higher. But then the bears have been saying that for years.
So long as you've got a longer-term investment horizon, I believe there should be far more share price gains to be had in Australian and international tech shares.
