Use the market's first-half turmoil as a reason to assess the risk levels in all of your holdings. No one is questioning the long-term growth potential of technology as an industry. But many Wall Street pros note that, even after the second-quarter dive in tech stocks, many of them still are priced at extraordinary levels relative to earnings or expected earnings. It particularly doesn't care if you overpaid. If not, there are many ways to structure your portfolio to lower the overall risk.
Some investors end up with a too risky portfolio more by accident than by design, planners say.
They buy tech stocks that do well and become an increasingly large portion of the portfolio. Investors also can try to limit their risk by hedging their portfolios through more advanced strategies, such as by using so-called put options. A put gives an investor the right but not the obligation to sell a stock or stock index at a certain price within a set period of time. If the market price of the stock or index falls below the put price, the put rises in value. But failing to act can have far worse consequences in the long run.