Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19
Gold Price Gann Angle Update - 10th July 19
Crude Oil Prices and the 2019 Hurricane Season - 10th July 19
Can Gold Recover from Friday’s Strong Payrolls Hit? - 10th July 19
Netflix’s Worst Nightmare Has Come True - 10th July 19
LIMITLESS - Improving Cognitive Function and Fighting Brain Ageing Right Now! - 10th July 19
US Dollar Strength Will Drive Markets Higher - 10th July 19
Government-Pumped Student Loan Bubble Sets Up Next Financial Crisis - 10th July 19
Stock Market SPX 3000 Dream is Pushed Away: Pullback of 5-10% is Coming - 10th July 19
July 2019 GBPUSD Market Update and Outlook - 10th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Is Apple too Big for Nasdaq? Can it Keep Driving Technology ETF Stocks Higher?

Companies / Tech Stocks Apr 17, 2012 - 08:00 AM GMT

By: Money_Morning


Best Financial Markets Analysis ArticleDon Miller writes: Despite the recent selloff, shares of Apple Inc. (NASDAQ: AAPL) have skyrocketed 48% in the first quarter, dwarfing the 12% gain posted by the S&P 500.

Apple's astonishing rise has also helped to underpin the Nasdaq Composite, which gained nearly 19% in the first quarter -- its strongest showing since 1991.

But that's not the only place to experience the "Apple Effect."

Many investors who own technology ETFs -- which hold almost 4% of all Apple shares outstanding -- were rewarded with even better returns.

For instance, theVanguard Information Technology ETF (NYSE: VGT) was up 20.85% in the first quarter.

Even better, the iShares Dow Jones U.S. Technology Index Fund (NYSE: IYW), was up 21.77%, thanks in part to Apple.

Now the question is: Can Apple's momentum continue to drive technology ETFs higher?

Is Apple Inc. (NASDAQ: AAPL) Too Big?
Apple, the world's largest company with a market cap closing in on $600 billion, has grown so large that the stock accounts for almost 20% of some of the ETFs tracking the technology sector.

For example, Apple represents 18.7% of the Select Sector Technology SPDR (NYSE:XLK), which holds about $9.8 billion in assets overall.

Some analysts are warning that tying your fate so heavily to one investment could be extremely hazardous to your financial health.

"This astonishing public valuation has had some unexpected effects...chief among them is the risk of overconcentration, as a great many indices and the ETFs that track them are weighted by market cap," said Dave Fry at ETF Digest.

In fact, many investors are concerned that Apple's amazing performance is pushing the whole market up.

According to data compiled by Bloomberg News, the Cupertino, CA-based company has surged 653% since March 9, 2009, accounting for 8% of the S&P's 103% surge.

Humming Along Without Apple Inc.
But while Apple's influence is one of the largest ever by a single stock, the broader market would still be humming right along without it.

Fact is, the S&P 500 would have nearly doubled even without Apple.

And even if the tech giant's meteoric first quarter rise is excluded, the S&P still would have jumped by 10.4%, its best start since 1998, according to Bloomberg.

"The rally has been much more than Apple," said Howard Ward, a money manager at Gamco Investors Inc. who helps oversee $36 billion, told Bloomberg. "Apple no doubt has added some sparkle to the technology sector, but all market sectors have risen."

Although it's viewed somewhat differently, the surge in tech stocks in 2012 may remind some investors of the boom, when the technology sector also led the whole market higher.

Mobile computing is everywhere. Cloud computing, text messaging and social media dominate the landscape.

But this tech boom isn't being led by the Internet stocks that left baby-boomers holding the bag at the turn of the millennium.

After Apple, the top 10 holdings for the four biggest ETFs include household names like Microsoft Inc. (NASDAQ: MSFT), Intel Corp. (NASDAQ: INTC), and International Business Machines Corp. (NYSE: IBM).

All are surging on the strength of new spending by corporations rebounding from the recent financial meltdown.

"Tech firms had come out of this recession enjoying double-digit growth in technology investments from corporations...there are still reasons to be confident about longer-term trends favoring tech firms," according to analyst Robert Goldsborough of Morningstar.

Technology ETFs: Perfect for Investors
A large weighting of one stock in an ETF, such as Apple, isn't good or bad, it's just important to know.

Besides giving you an efficient way to get quick, broad exposure to the sector, ETFs are especially suited to the technology market.

They are easy to trade and you don't have to pin all your hopes on one stock, even if Apple is a large part of the portfolio.

One thing to think about is whether you want to own Apple itself -- or the entire sector with a dose of Apple.

Matthew Hougan, President of ETF Analytics, says investors who are thinking about using ETFs to play the technology boom should ask themselves what they are really buying into.

"Is it the technology renaissance? The mobile device boom? Or Apple's specific creativity, brand and ability to execute?" asked Hougan.

If the answer is yes to one of the first two, ETFs are a good way to play it. However, if it's just a yes to the last question, then just buy Apple stock itself, Hougan says.

But with or without Apple, technology ETFs are likely headed higher.

Source :

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email:

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules