There is a rule in technology called the 90-9-1 rule, and it usually holds true. Leading tech stocks tend to dominate 90% of the market, the second-place company gets 9%, and everyone else scraps for the remaining 1%.
If you’re an investor, the rule is simpler: Go with the winner.
This is where we get the word “WinTel” from. WinTel described the virtual PC monopoly held by the Microsoft (MSFT) Windows operating system, running on Intel (INTC) hardware, 20 years ago. You could have owned Apple (AAPL) in 1994, or Advanced Micro Devices (AMD), but in terms of the market as it was at the time, you would have been wrong.
You go with a winner until it’s no longer winning, notes Rich Winer, a wealth adviser with Steel Peak Wealth Management LLC in Woodland Hills, California. “People assume that just because a company has had a strong run, that the run has to end,” he says.
The end of the run isn’t based on valuation, but technology. Winners become losers only when their niches are destroyed, as Nokia (NOK) flip phones were destroyed by the Apple iPhone, or as Canon film cameras were by digital cameras.
The following 9 tech stocks are today’s modern-day corporate kings. For now, you want to own them – not based on any sort of relative valuation, but on the continued strength of their niches. As long as they have “runway,” or growth potential, stay in them.