Technology Stocks in 2016

A few dips in tech stocks have affected the economy since the late 1990s. Maybe this time, we will see the last major dip if there is to be a drop. Maybe it will not be as catastrophic as the one experienced heading into this new millennium. I don’t think there will be such a thing, but I do see news that I find surprising.

A major buzzword of the last few years is Unicorn. They are the special technologists that can create new fortune for a company. That word also describes companies seen on the fast track to success. Such a label can indicate both promise and major disappointment.

Social media forums are not without their advocates for a given wave of technology. You hear about the virtues of companies and tech visionaries. On this blog, I’ve done my share of that in the past. Over time, you recognize that few can live up to the hype showered upon them.

Surprises this go around start with Tesla. Their losses have continued for the 11th straight quarter. I have no doubt they will usher in electric cars, but the cost may be higher than anticipated. The profit may not be there.

Twitter is losing users and the stock price is going down. Social media companies and several organizations structured the same way represents a certain approach to making money on the Web. Sale of user traffic and web site interaction data. Not a hard product like socks, toothpaste, a car battery, or a television. Rather, a soft product more driven on perception than necessity, thus it can be more volatile.

The theme continues with the layoffs at Yahoo! Perhaps that should not be so unexpected as the prior year saw similar drops of a greater magnitude. The companies involved have not faltered, but faced the realization that times have changed.

Amazon remains the big company to beat. They are going to buy back $5 billion in stock. That is not necessarily bad news for them, but does affect perception of tech as a business. The sense exists that tech is no longer the major opportunity driven more by vision than fundamentals. At the end of the day, we may yet see a return to core competency in business in general.

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