How to Play Tech During a Recession
If you had invested $1,000 in semiconductors, you would have lost $840 in the last recession (2000 through 2002). Mobile telecoms would have made $910 disappear. And telecom companies (which encompass both mobile and fixed-line) would have stripped you of $920.
But avoiding tech stocks this time around would be a classic case of learning the wrong lesson.
In 2000, techs were at all-time highs. Their prices were absurdly expensive. The dot-com crash brought down the entire sector, deservedly or not.
It’s different now. The tech stock index, Nasdaq, has made much less progress than the Dow or S&P 500 in making up lost ground since 2002. And tech stocks are no longer so expensive. Yet, I’d understand if you were nervous about rushing into this sector, so I have a suggestion for you: Look at telecom and semiconductor stocks from overseas instead of the U.S.
My favorite telecom stock, France Telecom (FTE), is exceeding analysts’ expectations and had a great year in 2007. My semiconductor favorite is from Taiwan – Taiwan Semiconductor Manufacturing (TSM). And both companies give generous dividends. These are the safest tech plays with the most upside – even with a recession bearing down on us.
[Ed. Note: ETR’s Investment Director, Andrew Gordon, is the editor of INCOME, a monthly financial advisory service that uncovers income-generating stocks that promise safety (first and foremost), along with much-higher-than-average profit potential.]Andrew Gordon
Andrew Gordon is a former editorial contributor for Early To Rise Investor’s Edition. He has 20 years of experience working in infrastructure and environmental projects around the world. When he wasn't traveling, he taught marketing and finance courses at the state university of Maryland. Mr. Gordon has authored several books for McGraw Hill and other publishing companies on energy markets, global countertrade practices and the hot growth sectors of China and Russia. He is also a top-rated speaker at financial conferences.