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Golden Opportunity for Tech Investors


Forced selling creates compelling valuations.

As I said in a recent post, this is an excellent time to be an investor in technology. If I had to summarize what we're seeing in a single sentence, I would offer that we're seeing 2 phenomena occurring at the same time: First, a re-pricing of risk; second, the global financial system is finally pricing in the fact that the US is losing its financial and military dominance.

These 2 things happening simultaneously have created unprecedented volatility, which in turn has killed the performance of many investment institutions and created widespread fear and panic to the degree that the proverbial baby is being thrown out with the bathwater.

All this being said, I do believe that we will look back at the charts in several years and realize what a wonderful opportunity to invest in technology names we had in October 2008. We are now working through what the Gartner Group refers to as "The Trough of Disillusionment" within The Hype Cycle.

Since the dot-com bust, we have seen other asset bubbles emerge and therefore, while individual fortunes have been made and lost, we have not seen a true shakeout of systemic problems in the global markets until the summer of 2007.

Obviously recognition of these problems has accelerated and the kind professors of MV have done a fabulous job of keeping the readers abreast of these ongoing issues. Much of this forced selling, and fear about a lack of future growth, has hammered technology stocks to the point where I'm seeing some compelling valuations.

What I ask myself as a technology investor is:

1. Is the environment on Main Street really as bad as the market would have you believe?

2. Are some of the secular trends that we have seen with respect to IT infrastructure build out over?

In my humble opinion, the answer to both questions is a resounding "no."
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No positions in stocks mentioned.
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