Should you invest in tech?

Maybe. Maybe not. I kicked this question around in Saturday's Globe and Mail:

“We've had a big correction in tech, particularly since June. However, what you now have is a trade-off between more attractive valuation but the outlook isn't as rosy as you would have said a year ago,” says Ian Ainsworth, senior vice-president at MacKenzie Financial Corp.
So, is it time to rebalance your equity portfolio, picking up some cheap tech stocks in expectation of better days ahead? Or, is there worse to come for the tech stars, and should you look elsewhere?
Bob McWhirter, president and portfolio manager at Selective Asset Management Inc. says your view on the sector is likely coloured by your outlook for overall markets. As markets move up, tech stocks tend to outperform. But as markets weaken, tech issues tend to get punished a little more than other sectors.
“At the moment, we are cautious with regard to our outlook for 2005,” Mr. McWhirter says. “We think there are pretty good buys within the tech patch, but over all, tech is a market-neutral at best.”
Gavin Graham, vice-president and director of investments at the Guardian Group of Funds, takes an even more bearish view. He says investors may want to look at something other than technology.
“You want to be very cautious. The easy money has been made,” he says. If you want to overweight a particular sector, Mr. Graham likes consumer staples, financials or energy. “All of these are boring. Tech is sexy. But if you'd been boring, you would have made money.”
Mr. Graham believes technology won't be attractive again for another nine months to a year.
Duncan Stewart is not waiting that long. He's in technology full time, running some technology funds at Tera Capital Corp.
Mr. Stewart believes technology should be part of every equity portfolio, if only because the sector makes up about 20 per cent of equity markets and about 20 per cent of economic activity.
“You want to build your portfolio with a certain amount of discipline and even if you really hate a sector, you probably shouldn't zero-weight it. You might half-weight it,” Mr. Stewart says. He suggests that investors might still want to have 5 to 10 per cent of their equity holdings in technology. “Zero-weighting is always incredibly risky because you might be wrong.” [Read the full story]