The S&P/ASX200 has dropped today, shedding 73.50 points or 0.95% to 7,625.90 after setting a new 52-week high.
The bottom-performing stocks just after lunch today were Silver Lake Resources (ASX:SLR) Ltd and Liontown Resources (ASX:ASX:LTR) Ltd, down 11.46% and 8.21% respectively.
Over the last five days, the index has gained 0.82% but is virtually unchanged over the last year to date.
Sector-wise it has been a bit of a mixed bag. Materials were down the most (-2.66%) while Utilities (-1.46%) and Energy (-1.11%) weren’t far behind.
The only sector to make a reasonable showing was Health Care (up 0.13%), barely holding its own.
Should I invest in tech?
Jason Hollands, managing director of investing platform Bestinvest by Evelyn Partners, says investors should not get too carried away with the idea that they should just throw their lot in with tech stocks:
“2023 saw eye-popping returns on US mega-cap growth stocks, with the Bloomberg Magnificent Seven Index, which is comprised of an equal weighting in these seven gargantuan stocks, soaring an impressive107%, in large part driven by investor excitement by the potential of AI.
“After that, some were probably wondering how much further they could go in 2024.
“Meta’s (profit) announcement was remarkable in several ways. The numbers were astounding, with reported and forecast revenues outgunning expectations, advertising profitability and user numbers surging, and the firm also managing to keep costs under control.
“Profits multiplied to $10.6 billion for the quarter to end-December from $300 million a year earlier.
"But it’s the dividend that will raise eyebrows: not only did Meta announce an additional share buyback of $50 billion but nearly 12 years after its landmark 2012 IPO it announced its first dividend payout to shareholders of 50 cents a share.
“That means it joins Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Nvidia among the Magnificent Seven growth stocks in adopting a dividend policy."
Hollands said: "The promise of a little income as well as the potential for growth will have been a major factor in driving Meta stock up ~15% last night.
“There was a less revelatory update from Apple where there are concerns about slowing sales in China, which accounts for a fifth of its sales. But Amazon’s stock was also up 7% after a not-altogether positive announcement, helped by messaging around cost controls.
"Barely one month into 2024, the Bloomberg Magnificent Seven Index is up 3.4% and the tech-heavy Nasdaq Composite index is up 4%.
"This is bound to turn the heads of investors, who must be wondering if they can maximise their gains by throwing in their lot with US ‘Big Tech’ and the AI narrative that has powered some of those stellar gains.
“What many private investors must remember, is that they could already be exposed to these companies, because of the increasingly extreme concentration amassed in many global and US funds to US mega-cap growth stocks.
“A passive S&P 500 index tracker will now be about 28.6% devoted to the Magnificent Seven because of their soaring market capitalisations, while even a global equities tracker following the broader MSCI World Index comprised of 1,480 companies will have around 19% exposure to these seven big beasts which together are now valued more than the entire Japanese, US and Canadian stock markets combined!
“Many actively managed global equity funds also have exposure to these ‘superstar stocks’ of the moment."
He added that investors needed to think carefully whether they were already taking enough of a bet on what was such a narrow cluster of companies before piling further cash in behind them.
“There’s no doubt that sectors like technology and businesses with online models have developed considerably since the start of the century, shifting from relatively speculative businesses to ones that are maturing and highly profitable, making them a major driver of global markets and many funds’ investment performance," Hollands said.
“Whether to ‘double down’ on this situation and take on extra exposure to buying individual shares or specialist tech-focused funds or investment trusts is a personal decision that should be taken with consideration as to your overall portfolio diversification and the risks.
“Adventurous investors with a strong belief in the AI theme and a higher risk tolerance might decide to add a satellite tech-focused fund to their core holdings, or an ETF that zooms in on the Magnificent Seven.
“But just through the gains of the last 12 months, it’s likely that many portfolios will have become skewed towards the giants of the S&P 500, and that natural concentration will be enough of a portfolio bet for most investors with average risk tolerance.
“Diversification both by geographical and by sector generally protect the private investor against sudden shifts in sentiment, macroeconomic shocks, regulatory environment and geo-political disturbances.
“Investors must remember that each of these unknowable elements could suddenly turn the tide on runaway growth stocks, as occurred in 2022.”
Five at five
Globe Metals and Mining closer to opening first globally significant niobium mine in 50 years after positive study
Globe Metals & Mining Ltd (ASX:GBE) is looking at some impressive economic and environmental outcomes from the Kanyika Niobium Project in Malawi, following its recent optimisation study.
Read more
Silver Mines completes $8 million placement to fund Bowdens development; eyes $2 million in SPP
Silver Mines Ltd (ASX:SVL, OTC:SLVMF) has added $8 million to the bank following a successful share placement to institutional, professional and sophisticated investors, with demand well in excess of funds raised by the company.
Read more
South Harz Potash nears completion of pivotal pre-feasibility study for Ohmgebirge Project
South Harz Potash Ltd (ASX:SHP) is on the verge of wrapping up the pre-feasibility study (PFS) for its Ohmgebirge Potash Development in central Germany.
Read more
Resource Mining Corporation acquires two copper-gold projects in Tanzania
Resource Mining Corporation Ltd (ASX:RMI) has acquired the Mpanda and Mbozi projects in the Ubendian Orogenic Belt of Tanzania, two highly prospective copper-gold packages covering a total of 1,580 square kilometres.
Read more
Miramar Resources seeks to unveil new WA nickel province at Bangemall
Miramar Resources Ltd (ASX:M2R) is pushing ahead with the exploration of its district-scale Bangemall Project in the Gascoyne region of Western Australia, where it holds a dominant land position in this potential new nickel, copper and platinum group element (PGE) province.
Read more
On your six
Federal Government introduces vehicle efficiency standards to curb emissions
The Australian Federal Government has introduced vehicle efficiency standards targeting emissions from new vehicles sold within the country.
Read more
The one to watch
Olympio Metals starts maiden diamond drill program at Cadillac Lithium Project
Olympio Metals Ltd (ASX:OLY, OTC:COPGF) managing director Sean Delaney sits down with Jonathan Jackson in the Proactive studio to discuss the start of its maiden diamond drilling program at the underexplored Cadillac Lithium Project, which covers 190 square kilometres in the rapidly emerging Cadillac-Pontiac lithium camp of Quebec, Canada.
Watch