Why Tech Stocks Will Keep Beating the Broader Market  

Last week the Nasdaq Composite Index crossed the 5,000 level for the first time in 15 years.

The bears say this is proof we're living through another tech stocks "bubble" - and that a collapse like the dot-com debacle of 2000 is close at hand.

But the gloom-and-doomers are wrong. In the long run, technology shares will beat the broader market - and by a wide margin.

There is simply no comparison between today's Nasdaq and the go-go years of the Roaring '90s.

First, let's compare the pace of tech investing then and now...

Why There's No Tech Stocks Bubble Today

FB stock priceBack in the dot-com era, it took the Nasdaq just 49 days to rise from 4,000 to 5,000, a climb of 25%.

This time around, it has taken nine times as long - or 455 days - to do the same thing. The Nasdaq closed at 4,017 on Nov. 26, 2013, and closed at 5,008 on March 2.

Despite a much larger economy and 15 years of inflation since then, tech stocks are substantially cheaper today than they were in the late '90s.

Price/earnings (P/E) ratios illustrate this. By that stock-value standard, tech stocks today are 81.7% cheaper than they were in the late '90s.

At the height of the dot-com rally, Nasdaq stocks traded at 175 times earnings. Today, that figure stands at 32 - making today's stocks five times cheaper than they were then.

Finally, when we take inflation into account, the Nasdaq is well below its previous high. In 2000 dollars, the index would have to hit 6,908 to have the same value as back then, for an additional rally of 38%.

In other words, tech stocks are nowhere near overheated. There are still plenty of ways to profit.

Indeed, we're at the starting line for the greatest wealth-creation cycle the tech sector has ever seen.

Right now I can identify more than a dozen tech-sector "ignition points" - catalysts for growth.

Here are just a few examples:

Digital payments, mobile communications, cloud computing, connected cars, medical tech and biotechnology, miracle materials, the Internet of Everything (IoE), sensors and semiconductors, and Big Data.

Each of these "ignition points" is a vibrant growth market unto itself.

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Even more important, they are all interconnected. And those connections have created a gigantic, tech-sector-wide "ecosystem" that will supercharge growth across Silicon Valley - creating fortunes for those who invest now.

To give you a sense of how much potential still lies ahead for tech investors, consider how our smartphones are "interlocking" with near-field communication (NFC) technology to create a whole new industry - mobile payments.

With mobile payments, which got its big "ignition" spark with Apple Pay late last year, consumers use their NFC- and credit-enabled smartphones to pay for items at checkout counters.

According to Gartner, mobile payments will nearly triple from $235 billion in 2013 to $720 billion in 2017.

And that doesn't take into account the value of smartphone apps, mobile ads, cybersecurity, the chips, and sensors that go inside - or the phones themselves for that matter.

That's just one example among many.

Everywhere you look, all these technology "ignition points" are interlocking and then driving the U.S. economy - and the tech stocks that make up the Nasdaq - forward.

Tech stocks can deliver yearly returns that are 50% greater than their more conventional counterparts in the S&P 500 and Dow Jones. We just released a special research report called "The Million-Dollar Tech Portfolio." It includes five stocks and two other investments that will start you down the path toward a fortune of your own. Find out how to download this report here and get started today...