Reminiscent of the late ‘90s, the technology sector is leading the way in 2009. After a double digit increase year-to-date in certain technology industry sectors, is it time to party like it’s 1999? Be careful jumping on the bandwagon. After the market of 2008, it might be a moot point to remind investors of risk -- but that’s what I do.
In 1999, the tech sector as measured by the NYSE Arca Technology 100 Index was up 116%. After the tech wreck of 2000, the Index still hasn’t made its way back to 1999 levels. More than 10 years after the peak, the Index is still more than 40% off its highs.
Even the financial services sector is showing signs of life. The Dow Jones Select Financial Services Index was up more than 16% on Thursday, April 9 -- yes, in one day (not year-to-date). Some investors will want to follow the momentum with sector mutual funds or ETFs, but they should be reminded to manage their expectations. While there is a long way to go to reach levels of the previous bull market, it won’t happen in a matter of days.
I’m sure it’s clear I’m not calling a top, a bottom, a good opportunity, or a poor opportunity. The point to make is that managing emotions -- fear and greed -- and expectations is a key to successful, long-term investing. An appropriate mix of equity funds and fixed income funds that is based on long-term goals is prudent.