Tech investors need to be innovative

Mark Zuckerberg, founder and chief executive officer of Facebook Inc., smiles during a news conference at the company’s headquarters in Palo Alto, California, U.S., on Wednesday, Oct. 6, 2010.

Tech is a no brainer for investors. But a simple investment theme for the sector is being badly executed.

Investors are too narrow in their focus, chasing Nasdaq and FANG (Facebook, Amazon, Netflix and Google) stocks similar to how investors often play emerging markets in a simple fashion.

Investor sentiment is cautious, except when it comes to tech stocks — even a scandal doesn’t hurt for long. The scale of the Facebook data privacy issue is still being uncovered with new revelations about information shared with Huawei, a Chinese company that some American politicians and regulators want banned from government contracts because of national security concerns. Facebook stock continues to trade around records.

Apple recently got handsomely rewarded for making sense of tech disruption, its market value soaring close to a trillion dollars as it embedded all of the themes — big data, artificial intelligence (AI), augmented reality (AR), internet of things (IOT) and enhanced security — under the hood of its iPhone.

The problem is that the market now considers tech stocks a defensive play. How did a growth sector, trading around eye-watering valuations thanks to crowding, suddenly become defensive? Has everyone forgotten it also sold-off in the February meltdown and again in March?

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