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Wednesday, March 31, 2004

Long Time, No Tech

I haven't been around in awhile because frankly there's not much new out there in tech land. I will point to this story on because the talking heads are now coming out about the impact of high gas prices on the rest of the economy. Hello?!?! Wasn't I saying that on, oh, March 17th?!? Yes, yes I was. Thanks for coming around guys.
What else. The market is going to be choppy. Bush has lost the election. Mark my words, he won't make it. He barely won it in a squeaker last time and I think voters have migrated away from him on the Iraq war issue. Again this is not a political statement, just my assessment of the biggest political factor on the horizon. Make your Kerry assessments now because they're only going to increase in likelihood. Although, I will say this: Kerry's economic plan remains pretty 'fluid' and I expect to see several surprises in terms of sectors that will be supported or underfunded which could have a major impact on valuations. Make sure you know your Kerry policy going into November. I surely will.
What else? I guess econ data came in disappointing today. Actually when I use the word disappointing, I don't use it lightly. There's a difference between 'disappointing' and 'underwhelming' -- disappointing is worse. Growth just isn't there and I think that gas may finally be the spectre that takes down the consumer. That being said, I think that corporate profits are healthy and corporate governance is having a measureable impact. Next we'll get better shareholder representation at the board level. These last few factors are actually major positives for stocks. However, if Kerry eliminates the cap gains tax cut, this will be a major negative for stocks.
But let's talk tech. Tech is doing great. The companies that are out there today are 1000 times better quality than what we had floating around in 2000. Seriously, it's true. Many tech companies are making A LOT of money. Check out Yahoo!'s cash flow sometime. Additionally, expectations are somewhat more sane. I'd love to see what next year's earnings multiples are compared to what they were in 2000. I bet the difference is striking.
The caveat for tech is that I would be really worried if my companies weren't making a profit by now. Unless they have a damn good, rock solid growth story ahead of them, I'd sell and not look back. We are in a trend of the strong getting stronger in tech, not the small and weak suddenly becoming healthy. The turnaround stories are almost all wrung out here -- you should've been looking for those a couple of years ago. (Hello ValueClick!)
Earnings season could be interesting. Lots of companies may beat. However, that may be baked into expectations at these levels.
We'll find out!


At 8:59 AM, Anonymous QUALITY STOCKS UNDER 5 DOLLARS said...

Nice take on technology.


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