Here’s Why the Tech Stock Rally Has Plenty of Legs Left

nasdaq qqqTraditionally, investors thought of technology stocks as being volatile, trendy, and even dangerous. But nowadays that reputation has changed, and tech stocks and ETFs have become a favorite for investors of all types.

That means that tech ETFs have plenty of room left to rally.

The sea change of perception has been driven by many factors. For one, technology has become so pervasive in our society that middle-aged people and seniors no longer fear it. Smartphone and tablet adoption has soared among all age groups — not just kids — which has driven higher profits for tech companies of all kinds.

The industry has also matured, with many companies like Microsoft and Apple now having been listed on public markets for several decades.

And then there’s the very significant issue of dividends. “Times are changing, and the technology sector of the S&P 500 is now among the top dividend issuers. Technology companies began to compensate shareholders during the financial crisis, and the habit stuck,” says Brenton Garen of ETF Trends.

In an era where fixed income markets around the globe are offering record-low yields, investors continue to flock to higher-yielding stocks. Now that group includes many tech names, and even tech ETFs. Such a thing would have been unthinkable even 10 years ago.

Technology is already a huge part of America’s economy, and its share increases year after year. It’s one of the things that separates America from the rest of the world.

Investing in technology means investing in America. And as Warren Buffett would say, that’s a pretty safe bet.

The PowerShares QQQ Trust, Series 1 ETF (NASDAQ:QQQ) rose $0.12 (+0.10%) to $115.46 per share in premarket trading Thursday. The QQQ, which is the largest ETF that tracks the Nasdaq 100 index, has gained 3.1% year-to-date, but is up nearly 20% from its February lows around $96.


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