Stocks have been weaker in the past three weeks but with recent declines, the technology sector is becoming more appealing. If we look at the primary reasons for market weakness, which include Greek debt, China and core inflation, we can analyze how these primary factors affect the technology sector. The Greece issue is mostly a non-event for technology. We can safely conclude that only a few companies, which sell their software or hardware to the Greece government, will be affected. But then Greece is not even as significant a buyer of these products as say, a big corporation like AT&T (NYSE:T) or Bank of America (NYSE:BAC).
Greece's debt woes have absolutely no effect on consumer electronics and people's interaction with technology products. China in fact is still growing and an increase in industrial production there means that Chinese companies will have to become more technologically savvy to compete more efficiently in the global market. Inflation in food prices or overall inflation again is a positive for technology companies as other companies will rely on efficient cost and inventory management using tech products from a wide range of companies such as Oracle (NYSE:ORCL), SAP (NYSE:SAP), IBM (NYSE:IBM) and Google (NASDAQ:GOOG).
For these particular reasons, I think it's a good time to take advantage of weakness in tech sector to start building longer term position in the companies such as Apple (OTC:APPL), Google, Oracle, SAP, IBM (IBM), Applied Materials (NASDAQ:AMAT) and the list can be expanded further.
With focus on renewable energy and constant rise in natural gas and gasoline, renewable energy companies can be included in the portfolio as well. Some good names are First Solar (NASDAQ:FSLR) and Sun Power (SPWRA). Sun Power is especially down almost 15% because Total's stake buying was completed. However, that also means much smaller float available to public now. This means better returns going forward on Sun Power's stock as company realizes on demand and synergies from Total's operations.
Also, given the recent IPOs, established tech sector companies like Apple, Google and Microsoft do stand to benefit as people use more and more smartphones and cloud services to utilize technology of the startups like Pandora (NYSE:P) and Facebook. Additionally, product life cycles are reducing more quickly and new product introductions bode well for profit margins of core technology companies.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.