Tech and Telecom Sectors: Time to Be Selective
Given the tech sector's higher recent volatility and overvaluation, we're seeking wider margins of safety and established economic moats.
Despite flat stock returns for the S&P 500 through the first quarter, it hasn't been a particularly smooth ride for investors. The technology sector as a whole has lagged the market but there were notable areas of strength and weakness, often hinging on a firm's quarterly execution and management's initial 2015 outlook. The drop in oil prices and global currency movements over the past two quarters have resulted in slightly elevated volatility levels across both the technology and communication services sectors, and today we remain selective. In aggregate, we view the tech sector as slightly overvalued.
Peter Wahlstrom has a position in the following securities mentioned above: AAPL. Find out about Morningstar’s editorial policies.