Apple, Google, and the New Tech Boom
By Jerry Robinson, FTMQuarterly Editor-In-Chief
Like most financial newsletters, we get a lot of questions about stocks like Apple (Ticker: AAPL) and Google (Ticker: GOOG). And for good reason. Shares of these two companies have been red-hot recently, making a lot of money for many investors.
Apple, for example, now composes over 12% of the entire market cap of the NASDAQ composite index — all by itself! The company is sitting on nearly $100 billion in cash. In March, the tech giant announced that it will begin paying a dividend for the first time in July 2012. And beginning September 30, the company plans to begin buying back $100 billion in stock.
Of course, tech stocks in general are still a sore spot to many investors who suffered major losses in the wake of the dot-com bubble. Regardless, no one can deny that technology should play a role in your investment mix if you are still several years away from retirement. Smart mobile devices and cloud computing are just two of the explosive trends that have changed life as we know it. And these trends are only set to intensify. Our desire here at FTM is to own the market leaders in these areas. The growth of ETFs has made the process extremely simple, and cheap, for those who want to avoid the risks involved in choosing a single stock.
Two ETFs that I personally prefer are:
1. Technology Select Sector SPDR ETF (Ticker: XLK), which is composed of the largest tech stocks, including Apple (Ticker: AAPL) (APPL makes up nearly 20% of the entire fund), Microsoft (Ticker: MSFT), and Intel (Ticker: INTC) to name just a few. XLK is currently priced at around $29.50 and offers a reasonably priced way to access the world’s largest tech companies. With a low expense ratio of 0.18% and YTD returns of 18.88%, this ETF is worth considering if you are looking for a lower-risk way to increase your exposure to technology stocks.
2. Powershares NASDAQ Internet ETF (Ticker: PNQI)Those seeking specific ETF exposure to Internet companies like Priceline (Ticker: PCLN), Google (Ticker: GOOG), and Chinese search engine Baidu (Ticker: BIDU), can consider PNQI. This ETF, which carries more risk and has a higher expense ratio of 0.60%, has provided a stellar 3-year return of over 40%.
These two ETFs are most ideal for those with at least a 5-10 year time horizon and a strong tolerance for risk.
The above article is an excerpt from our Spring 2012 FTMQuarterly Investment Newsletter. To read the entire newsletter, click here.
Jerry Robinson is a leading authority on the petrodollar system and global economic issues. He has spoken on the petrodollar system and global economics around the United States, in Europe, and in the Middle East. He is an Austrian economist, published author, columnist, international conference speaker, and the editor of the financial website, FTMDaily.com. In addition, Robinson hosts a weekly radio program entitled Follow the Money Weekly, an hour long radio show dedicated to deciphering the week’s economic news. For media inquiries, click here.