现在让我们快进到2017年底。T. Rowe Price科技基金的投资经理艾伦对这位胆小的男人只剩下了佩服。过去五年，亚马逊的股票上涨了近400%，它也是艾伦乃至整个T. Rowe Price公司持仓最多的股票——这家公司托管的资产近9500亿美金。亚马逊当年鼓捣的那个“莫名其妙的副业”也早已成了市场领先的云服务部门，且亚马逊已经连续10个季度宣告盈利。所以很显然，买亚马逊的股票比自己开一家小店更赚钱。
科技板也是分析师眼中2018年将增长最快的板块。过去五年，T. Rowe Price公司的蓝筹股增长基金的年化收益率达到了惊人的18.5%（2017年更是达到了37%），令标普500相形见绌。基金经理拉里·普利亚表示，有些十几年前他避之唯恐不及的公司现在已经是他持有的最大资产了，比如亚马逊、Alphabet、微软、Facebook等等（其中Facebook虽然比前几家公司晚了一代，但在他的投资组合中却是第二大资产）。不过好在认购价格的增长与这些企业自身的增长基本是同步的。“很多科技公司的商业模式随着时间的推移，变得越来越稳定和不可或缺。”
史丹利百德公司（Stanley Black & Decker）
Ken Allen has a favorite story about a man who turned a case of cold feet into a small fortune. Back in 2012, the guy was considering going into retail and opening a store. But the prospective shopkeeper couldn’t shake the fear that Amazon, whose impact on commerce was only growing, would eventually put him out of business. At the 11th hour, he decided to take what was going to be his seed money and put it all in Amazon stock instead.
At the time, the bet seemed risky, even foolhardy. The e-commerce giant had established its reputation as the “everything store,” but its profit margins, year after year, were puny or nonexistent. (The company was also spending a lot of money on a quirky side business involving warehouses full of servers.) What’s more, as an Internet retailer, it belonged to an industry that many investors were wary of, fearing a repeat of the dotcom bust and burnout.
Fast-forward to the end of 2017, and Allen, portfolio manager of T. Rowe Price’s Science & Technology Fund, has nothing but respect for the reluctant retailer. Amazon stock has returned almost 400% over the past five years. It’s now not only Allen’s top holding, but the biggest position of T. Rowe Price as a whole, a company with almost $950 billion under management. That quirky side business? It’s now Amazon’s market-leading cloud-services division, and the company has reported profits for 10 quarters in a row. The bottom line: Owning Amazon stock has been much more lucrative than stocking shelves.
Amazon’s stratospheric rise, of course, is one of the great success stories in technology. But it also represents something broader and more important for investors. The company has expanded to encompass a diversified range of businesses that make it, in a sense, a microcosm of the market in a single stock. And it embodies the powerful wave of change that has swept the economy since the financial crisis—one that has broken down the barriers between “tech stocks” and the rest of the market.
For starters, it may come as a surprise to many investors that, technically speaking, Amazon is not a tech stock. In the S&P 500 and other indexes, it belongs to the consumer discretionary sector, for companies that make and sell nonnecessities, alongside Nike, Walt Disney, and Starbucks. On the other hand, ask anyone whose toilet paper automatically arrives via Amazon subscription, and the e-commerce company seems more like a consumer staple. Amazon’s house-brand batteries now outsell Duracell online, and the company will now get upwards of $16 billion a year in annual revenue from a grocery store—Whole Foods, which it acquired over the summer. Add to that its $16 billion-a year cloud business, its Netflix-challenging video streaming, and rumblings that it may enter the pharmacy market, and there’s a sense that there’s no industry Amazon won’t conquer.
The evolving reach of Amazon has coincided with a reconstitution of the U.S. stock market. Tech companies now dominate the market to an unprecedented extent, comprising the five most valuable companies: Apple, Google parent Alphabet, Microsoft, Amazon, and Facebook. Without the tech sector, the S&P 500 would have returned 14.6% this year through late November; instead it returned 19.5%. And while its relentless expansion has made many investors nervous, money managers argue that it’s time to accept the tech giants as the blue chips of today. In other words, if you want to have any shot of beating, or even keeping up with the market, you can’t afford to avoid them.
But Katie Koch, global head of client portfolio management and business strategy for fundamental equity at Goldman Sachs Asset Management, also highlights a paradigm shift in the way investors should think about picking stocks and about diversification itself. Own tech’s Big Five, she says, “but be cognizant of the disruption that they’re trafficking in, and how that can create other winners and losers.” That disruption is omnipresent because there are now tech companies everywhere in the economy—companies whose central missions are technology-centric, and those in other sectors that are making technical innovations central to their business models.
The upshot of all this is that it’s now possible—and maybe sensible—to build an all-tech portfolio that can tap the incredible growth that technological innovation offers, while still being diversified enough to protect investors from risk. It’s akin to that period a few years ago when dietitians inverted the food pyramid, rethinking the “base”—the foods we were supposed to eat most often—and swapping out carbs in favor of more bountiful helpings of fruit and veggies. These days, for a healthy rate of growth, tech should form the foundation of the typical investor’s portfolio, going where banks and perhaps Big Oil used to be.
At the same time, money management pros are lightening up on industries where profits have been undercut by new technologies. Doug Ramsey, who oversees $1.5 billion as chief investment officer of the Leuthold Group, holds no energy, consumer staples, utilities, or telecom stocks. But he does have about a third of his portfolio in tech, and is considering raising his allocation. If that sounds like bubble ¬behavior, consider that technology is still among the cheaper sectors, relative to historical valuations. It trades at 19 times expected earnings for the next 12 months, only a 4% premium to the S&P 500. That’s compared with the height of the dotcom boom, when tech valuations were 121% above the S&P 500 average. “There’s nothing like that today,” says Ramsey.
Tech is also one of the sectors where analysts expect to see the greatest earnings growth in 2018. Larry Puglia, whose T. Rowe Price Blue Chip Growth Fund has trounced the S&P 500 with annualized returns of 18.5% over the past five years (and 37% in 2017 alone), says that some of the same companies he avoided around the turn of the millennium are now among the biggest holdings in his portfolio, including Amazon (AMZN, +0.66%), Alphabet (GOOGL, +1.20%), and Microsoft (MSFT, -0.35%). (Facebook (FB, +2.38%), which came a generation later, is his No. 2 position.) One draw for Puglia: The switch to subscription pricing that has accompanied their growth. “Many of the technology business models have become more necessary and durable over time,” adds Puglia.
Can Main Street investors responsibly bet the bulk of their savings on such high-growth technology companies? Investors are finding that a more fluid definition of that category helps when crafting a market-beating portfolio. “Tech isn’t even its own stand-alone sector, because it has tentacles into all the other industries,” says Koch, ticking off its impact in retail (e-commerce), automotive (self-driving cars), banking (mobile payments), health care (big-data genomics), and more. Put another way: What isn’t a tech stock these days? “There are going to be very, very big supertrends happening,” Koch says, “but you need to be invested well outside the tech sector to get exposure to all of this, and maybe also outside the U.S.”
With that in mind, we talked with top money managers who helped us build a portfolio that’s 100% invested in technology—defined broadly—while still broadly diversified.
A version of this article appears in the Dec. 15, 2017 issue of Fortune with the headline “Investor’s Guide 2018 Stocks and Funds: The All-Tech Portfolio.”