Big Tech Caught in the Crosshairs
“Through our scientific and technological genius we’ve made of this world a neighborhood and yet we have not had the ethical commitment to make of it a brotherhood.”
— Dr. Martin Luther King Jr.
I can only wonder what Dr. King would think of today’s tech-powered global village.
Thanks to the proliferation of the internet and new technologies that sprang up in unison with it, we now have more access to people and information from around the globe than ever previously thought possible.
This has come with many surprise benefits. It’s also created some unintended problems. However, as Martin Luther King Jr. alluded to, with the right stewardship, new technologies can help us grow socially, politically and economically, on micro and macro scales.
That said, tech companies are facing a lot of scrutiny right now.
Tech Scrutiny Peaks
Along with new technologies come new vulnerabilities, and hackers have at times easily exploited this fact.
In 2019 alone, cyberattacks alone cost $2 trillion in damages. That number is expected to grow to $6 trillion by 2021, according to CPO Magazine. And it’s a big sticking point for many, as we become more and more “connected.”
Social media is also getting its fair share of scrutiny as well. The data are still very much incomplete, but there are studies now linking social media use to depression, feelings of isolation and even suicide, particularly in children and young teens.
And I doubt anyone will forget the Facebook/Cambridge Analytica scandal. One that alleged rampant 2016 election tampering and Facebook’s unwillingness to stop it…
Add to that an uptick in trust-busting rhetoric here in the U.S. along with the potential for a new digital tax to be levied in the EU and you have peak scrutiny right now.
And did I mention the trade war? Soybeans, manufacturing losses and farm bills stole the headlines, but Trump’s trade war is really about technology and protecting intellectual properties.
What Does This Mean for Tech Stocks in 2020?
Here’s the good news, folks. Through all this scrutiny, tech stocks are still the market leaders. And I expect that even after a few pullbacks this year, tech stocks will close out 2020 as market leaders again.
The tech-heavy Nasdaq also notched numerous new highs as we closed out 2019.
How is this possible considering all the headline noise tech stocks face?
Many tech stocks can no longer be called cyclical stocks. These big tech names are much more like staple stocks that are always in demand and can resist big swings from headline noise.
And I can’t think of any sector this holds more true for than the semi sector. Take for instance the early action today. After phase one of Trump’s trade truce seemingly became null as more tariffs were threatened over the weekend, the VanEck Semiconductor ETF (SMH) was slowly streaking upward in early trading.
The Bottom Line Is This…
Tech stocks, despite the rampant scrutiny they are facing, have proven to be much more resilient than cyclical stocks. This means we need to reconsider how we assess many tech stocks.
Meaning you should strongly consider adding a simple ETF like SMH to your holdings if you want to grow your wealth.
For Technology Profits Daily,
Chief Technology Expert, Technology Profits Daily