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Why investing in tech stocks still works

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Ever since the bursting of the dot-com bubble during the turn of the century that left many investors distraught and thousands to millions of dollars poorer, people have been skeptical of buying tech stocks.

And they have good reasons to think that way. History has taught investors to become more cautious and to not just ride the first bandwagon that comes to town.

However, the technology industry remains among the sectors that provide the best returns because of the unlimited possibilities and potential of innovation.

Value investors like Warren Buffett continue to shy away from such markets, but only because they look at the inherent value of companies and have perhaps not yet seen any new players with potential and reasonable stock value.

But the technology sector offers solid businesses with promising growth, as well.

Washington is the home to two of the biggest technology companies – Microsoft Corp. (MSFT) and Amazon.com Inc. (AMZN). Both are among World’s Most Admired Companies for 2013 released by Fortune and were primarily the reason why Washington was ranked the Most Innovative State in the US last year.

Tech stocks continue to rally Wall Street, with Amazon and Netflix (NFLX) among the frontrunners in the past days.

Late last year, Forbes came out with its own list of “growth stocks” that included Facebook (FB), LinkedIn (LNKD), 3D Systems and Universal Display. However, many of the stocks tend to be overvalued. The publication instead suggested Synchronoss Technologies (SNCR), which sells backup and activation services to mobile companies.

Despite its high price tag, Facebook’s stocks continued to rise while LinkedIn, which traded 700 times its 12-month earnings at the time the Forbes article came out, slowly dropped until it rebounded in mid-May.

Microsoft itself remains an enticing buy, especially with CEO Satya Nadella at the helm.

For investors who truly believe in technology and what it can bring in the future, Qualcomm (QCOM), Audioboom Group PLC (BOOM.L), and NetEase (NTES) have been quoted as good buys.

Qualcomm sells wireless chipsets that are required for every mobile phone or tablet while NetEase is a Chinese online gaming company. Both pay dividends.

Audioboom, on the other hand, is a London-based company behind the fast-growing social media platform Audioboo. From having only 19 channels and thousands of subscribers in 2013, the website, which hosts spoken word content from news and entertainment publishers, has ballooned to 2,000 channels and 2.5 million subscribers.

Its recent partnership with CBS Radio and Sky Sports bolstered its media content that already includes BBC and Aljazeera. The recent agreements have led to the stock’s upward movement.

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