Facebook Google Arent Tech Stocks What That Means for Invest

Facebook, Google Aren’t Tech Stocks? What That Means for Investors COLLAPSE https://www.wsj.com/articles/facebook-google-arent-tech-stocks-what-that-means-for-investors-1530461352 Large Tech companies such as Facebook, Alphabet, and Netflix are being reclassified on the S&P 500 from Technology companies to \"Consumer - Discretionary\" . This will change the make-up of ETF\'s that focus on the Tech and Telecom industries, and possibly change investor behavior to said funds. I.e., individuals who normally invest in telecom companies for high dividends may be flooded with high growth-risk tech stocks instead.

Does it make sense for these companies to be reclassified away from the technology classification? Netflix I could see as more consumer oriented but both Facebook and Alphabet are still highly focused on innovative technology.

If you owned ETF\'s focusing on the Tech industry, would you sell them knowing that big tech companies would no longer be covered in your holdings?

Solution

Firstly, Netflix is covered as Consumer Discretionary is acceptable as the revenues are more focused on consumers discretion on purchasing the service, Facebook and Alphabet are now slowly moving towards different technologies and are like too big to fail as they are present in any possible field one can select they started to become more like a lifestyle rather than usage of technology.

Now If I owned the ETF in Tech industry, I would most likely not sell them because

These big tech companies are already saturated in the market and the stock price and growth offered by them would be constant therefore in the evolving technology from day to day if we want a good return on Investment and growth better to invest in upcoming tech. companies ETF. Therefore no need to sell the ETF knowing about the news above. However, there are various other factors which need to take into account such risk and return, accounted growth rate etc. before taking a decision