Technology stocks were a good holding in 2007. Tech stocks in the S&P 500 index put up an average gain of 15.5% last year, versus only a 3.5% gain for the “500″ as a whole.
But what will 2008 bring? So far, it’s not been a good year for tech stocks. In the first two months of 2008, tech stocks lost 16%, in effect giving back all their gains from 2007.
Standard & Poor’s Chief Investment Strategist Sam Stovall says investors should have an “underweight” allocation to the tech sector. “We think 2008 enterprise spending growth will decelerate, owing to, in our view, relatively lean budgets,” he says.
However, because of the tech sector’s dominance in the U.S. and world economy, Stovall advises a 14% allocation to technology, which accounts for 15.5% of the S&P 500 index.