The technology sector was my top growth area in 2013 and it has been since the reversal out of the recession. The euphoric buying in social media and Internet services stocks in 2013 obviously shows the immense upside price appreciation potential that lies in the technology sector.
The NASDAQ recently broke above 4,200 to a 13-year high and is within 20% of its all-time high of just over 5,100, which it achieved during those crazy and irrational times in late 1999 and early 2000. But we all know what happened thereafter, when the Internet bubble burst.
Now, while we have seen some big-league moves in some of the mobile and social media stocks, the gains are still nowhere near the ridiculous moves made some 14 years ago in the technology sector. I recall some speculators becoming millionaires via buying technology penny stocks that really had no financial history, but these companies were able to cater to the greed in investors to propel the stock market higher.
I doubt these times will surface again, but we will likely see glimpses when stocks rocket higher for no apparent reason except momentum.
Following the Internet bubble, I thought we may not see 5,000 on the NASDAQ for years. But that time has arrived, as the NASDAQ may be set to reach this former pinnacle sometime in early 2015, as long as the investment climate remains positive for stocks.
Take a look at the long-term chart of the NASDAQ below. Notice the record peak in March 2000, when stocks spiked higher.
Chart courtesy of www.StockCharts.com
Since the technology sector imploded and the NASDAQ bottomed out in 2009, following the Great Recession, the index has been steadily rising. The trend on the NASDAQ from 2009 to now has been strong and bullish, as we enter the fifth year.
Yet what concerns me is the lower trading volume on the NASDAQ during this most recent bull run. I still feel the index will end up higher this year, but at the same time, I would advise caution, since the NASDAQ is likely vulnerable to a selling spree.
As we move along, the technology sector continues to be one of my top areas for buying opportunities; the technology sector is changing so rapidly, and we are constantly seeing new innovations and advanced technologies that will reward many companies in this space.
My top areas for growth in the technology sector include mobility, Internet services, and social media.
You want to find the innovators and companies that are not content with remaining status quo, but that are willing to always look for the next big technological breakthrough.
While my approach is to always search out individual stocks, you can always play the technology sector via exchange-traded funds (ETFs) such as the Technology Select Sector SPDR (NYSEArca/XLK), which holds some major companies, such as Apple Inc. (NASDAQ/AAPL), Google Inc. (NASDAQ/GOOG), and Microsoft Corporation (NASDAQ/MSFT).
On the small-cap side, consider taking a look at PowerShares S&P SmallCap Info Tech (NASDAQ/PSCT).
This article Why the Tech Sector's at the Top of My 2014 Growth List was originally published at Daily Gains Letter.