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Columns | Go Far With Kovar

Should I Get Out of Facebook and Other Tech Stocks ?

by Taylor Kovar
Hey Taylor - I own Facebook stock and had the pleasure of watching it plummet. Is it time to get out? Bigger question - are these tech shares way more volatile than anyone thinks? - Neil -

Hey Neil - Nothing like watching a single stock drag your whole portfolio down, huh? Facebook recently took a big drop, and it has a lot of people asking these same questions.

Personally, I don't think it's time to completely bail, and I definitely don't think you should panic about tech stocks as a whole. Here are a few reasons why.
1. News doesn't determine the value. The news definitely influences people and can help magnify certain issues, leading to extra buying and selling of certain stocks. However, that doesn't necessarily determine whether a company still has value. Facebook is used by billions of people around the world. Whatever your feelings about the platform and Facebook's current state of affairs, advertising dollars are still flowing into the company's coffers and its outreach isn't slowing down anytime soon. The stock might not recover immediately, but the internet isn't kicking Facebook out.

2. Tech is pervasive. Information technology and data analytics are only driving the market further into the digital age. We aren't about to see a change where people stop liking the convenience of connectivity and the ease with which we can access anything and everything. Yes, tech shares have high volatility since online businesses can be quickly outpaced by the next big thing; however, that doesn't make them bad investments. There will be ups and downs like with everything else, but if a company continues providing a useful service and traffic is steady, you shouldn't be afraid as a shareholder.

3. Keep long-term goals in mind. When companies go through rough patches, you have to take a step back and look at the big picture. In some cases, you have to jump ship. Many times, after a stock "plummets," the price is still higher than where you initially bought it. The market will continually ebb and flow, and the one constant is historically sustained growth. So, as you consider retirement goals and long-term planning, ask yourself: are tech companies going to be a driving force in the economy, or will something replace them? From where I'm sitting, I don't see tech stocks fading away anytime soon.

You're right to be cautious and concerned when a company drops like Facebook did. At the same time, you should try to stay cautiously optimistic about the market as a whole. Hope this helps, Neil!


Taylor Kovar April 13, 2018 column
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Disclosure: Information presented is for educational purposes only and is not an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance. To submit a question to be answered in this column, please send it via email to Question@TaylorKovar.com, or via regular mail to Lessons on Wealth, 106 E Lufkin Ave., Lufkin, TX 75901.


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