Really, simple examples help. Valuations don't work at a certain level, and valuations a year ago and through the peak in the spring reached unsustainable proportions. You want to be represented in all sectors of the market. For example, you want energy stocks, which are highly valued today but were in the dumps three years ago. It's just too hard to guess in advance which segments of the market will lead tomorrow and for how long.
Technology has two ramifications.
One is in its prevalence as an investment sector and the other is in the assistance it can provide to investors. As an investment, the technology sector is very difficult terrain. So much venture capital goes into trying to put existing companies out of business that it's tough to see whether there's any long lasting competitive advantage in any particular technology company. It's a very volatile segment of the market, and even if things go well it's almost impossible to figure out when to get out. But my view is that if you're going to invest in technology, you ought to invest in a diversified package with other sectors to buoy the portfolio when tech sinks.