Technology investors have been absent from Wall Street’s party scene for five years.

Technology-rich countries are closing in on 2021. Nasdaq CompositeThis is 23% more than the previous year. S&P 500The S&P 500 has gained 28% since Monday. The last two times the S&P 500 topped the Nasdaq occurred in 2016 and 2011.

There are still four days for tech stocks to make up this difference. But the last week in the year does not tend to provide much news that could spur an enormous rally. The indexes were up across the board on Monday, with the S&P 500 climbing to a record.

The Nasdaq started 2021 strong, picking up where it left off in 2020, almost doubling up the S&P 500’s gains by mid-February. Trading then slowed down with the introduction of Covid-19, which raised hope among investors that the U.S. would be able to overcome the pandemic and possibly lessen demand. remote work technologyHome workouts, food delivery apps, and tech-based living rooms entertainment.

Inflation was next. topping 4%In April, the maximum was as high at 6.8% in November. Initial expectations were that prices would rise in a temporary manner, but the inflation continued, leading to Federal Reserve to adopt a more proactive stance. rate hikesBy 2022

This has created double the opportunity for tech stock that are multi-faceted. The demand side for some businesses is a concern, but investors are also looking to invest in sectors that can withstand rising rates.

It was like the pandemic never happened. Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Okla. “The last five years, every time it looked like there would be a rotation out of tech, everybody bought the dip — 2021 will go down as the year that investors did not buy the dip in tech.”

Within the S&P 500, the top-performing subgroup of the year was energy, reflecting soaring gas prices. Real estate is next, offering high dividends while benefiting from surging consumer demand. warehouse spaceBoth residential and commercial properties.

Technology isn’t far behind, mainly because of mega-cap firms Apple Microsoft have held up well make up so much of the tech subgroup, and the overall S&P 500. Alphabet and Meta PlatformsAmazon and Facebook were previously part of the sub-index for communication services. Amazon belongs to the consumer discretionary category. They have both slightly outperformed the wider index.

Nasdaq’s biggest problem has been the plummeting market value of large companies in 2020 that were able to pick up enormous market caps, but then investors turned against them.

ZoomStocks have dropped by 45% after the last year’s drop. 326% increase in revenueIt led to a quintupling of its stock price. PelotonIn the meantime, plummetedThe stock rose over 430% in the last year after the revenue growth peak at 232% in the middle of 2020.

Twilio, Spotify BlockSquare, formerly Square, has experienced a drop of more than 20% each year. PayPalThe decline is 18% The WisdomTree Cloud Computing ETFThe, which is a group of publicly traded cloud companies that offer software, has been about flat in the past year, after having more than doubled in 2020.

Dollarhide stated, “I made it clear to my clients that heavy-tech people are likely to outperform the market overall.” But remember how far you have outperformed other markets in the past three to four year.”

In 2020, the Nasdaq climbed 44%, while the S&P 500 rose just 16%. From the end of 2016 to the close of 2020, the Nasdaq won every year, rising a total of 139% compared to the S&P 500’s 68% increase.

Dollarhide stated that he used the pullback in recent times to purchase shares of companies he believes are well-positioned for the future, even though they have fallen out favor. DocuSignAfter more than tripled in 2020, the price of, by example, has fallen 30% to $30 per share this year. Dollarhide stated that his company, thanks to its partnership with Charles SchwabSchwab eliminated faxes and paper forms from Schwab’s system, so DocuSign has been used by countless people. It is now the best way to open a new bank account.

“I am using DocuSign five-six, seven, and seven times per daily, where I used to do faxes, mailings five times, six, seven, and seven times each day,” he stated.

A second purchase was made by him was ZillowA failure to enter the home-flipping marketplace has led to a plunge in equities of over half of the shares. The company exited the businessAfter accumulating a loss in December, the company lost more than $328 million for its latest quarter.

Dollarhide stated that Zillow was a typical mistake. “Getting into and flipping houses — that’s a terrible idea. This was our first dip. This is an exaggerated reaction to the negative. They’ve lost their way. Investors like Zillow, DocuSign and Zoom offer individual buying opportunities.

To be sure, the performance difference between the two indexes isn’t as notable as it used to be, with the Nasdaq and S&P 500 starting to look more alike.

The seven companies with the heftiest weightings in the S&P 500 — Apple, Microsoft, Alphabet, Amazon, TeslaMeta and Nvidia — now make up about 27% of the index. The bulkiest index members are the Nasdaq’s largest, and this is what explains why their growth rates have been separated by just a few percentage points.

Fundstrat Global Advisors’ managing partner Tom Lee stated that “the market is becoming more FAANG”, referring specifically to Amazon, Apple, and Facebook. NetflixGoogle.

Lee speaks on CNBC. “Halftime Report”FAANG was more than those two companies to him. It also encompasses other technology leaders that have large markets and powerful pricing power. Lee stated that FAANG stocks were his second favourite pick heading into 2022, after energy.

Lee explained, “If there is panic about inflation or Fed tightening the Fed, the rest the market takes it pretty on the chin pretty tough.” FAANG looks solid for the first half, and I believe everything else is very uncertain.”

WATCH: Here’s why Fundstrat’s Tom Lee sees a pullback coming in 2022