What to do if you’re worried about tech exposure in your portfolio

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Some big names suffered large stock losses last week as they reported earnings.

Four companies — Google parent Alphabet, Amazon, Facebook parent Meta and Microsoft — collectively shed more than $350 billion from their market cap, the measure of the total value of all of their shares of stock.

Apple was a bright spot, with its stock soaring on Friday after beating expectations.

Investors who are worried about the tech sector can take comfort in the fact the current shift is not the same as the bust of 2000, according to Raymond James chief investment officer Larry Adam.

A key difference is the companies in question now are more robust, with earnings and in some cases dividends they’re increasing, he said.

As some companies take a hit to their stocks, the biggest takeaway is not to overreact, Adam said.

But it would be wise for investors to watch their exposure.

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The biggest names in the pure tech sector — Apple, Microsoft and Visa — make up more than 45% of earnings in that space, according to Adam.

Alphabet and Meta, which are technically in communication services, represent 53% of the earnings in that sector. Amazon is a big player in the consumer discretionary space.

“Tech is more dynamic than it used to be,” Adam said. “It’s in different components and sectors of the economy and the equity market.”

While investors may think they are diversified by owning different funds, they may actually have a lot of duplication across those holdings — and more tech exposure than they realize, said Ryan Viktorin, vice president and financial consultant at Fidelity Investments.

“It’s always about making sure you don’t end up in a lopsided portfolio,” Viktorin said. “You want to always go back to, ‘Am I diversified for the timeline that I have, for the risk tolerance that I have and for the goals I’m trying to achieve?'”

Here’s how to do that.

Assess your true portfolio risk

Increased volatility has prompted many clients to ask, “Am I still ok?” said Viktorin, who is a certified financial planner.

“The most important thing about an allocation or portfolio is get to a place where you can stay invested no matter what,” she said.

Each investor’s true risk may vary based on their circumstances. For example, someone who works in tech is already taking on substantial risk outside of their portfolio because their income is dependent on the sector, Viktorin said.

Ideally, you should be in an allocation diversified enough so that you can withstand a recession and successfully come out the other side, she said.

Look for value

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