MSN Jubak
Money will head back to high tech
After March 21, though, I think the logic of money flow works in
the other direction. A 10% correction will have taken the price
risk out of many of the technology stocks, and some of them will
actually seem cheap. The Fed meeting, whatever its result, will
be in the past, and the central bankers aren't scheduled to meet
again until May 16. Add in the inevitable end-of-the-quarter
window dressing, as professional money managers stock up on
the best-performing names of the quarter to impress clients, and I
think money should move strongly back into technology stocks.
I'm sure that some technology companies will miss earnings
during April's financial reporting season. Some companies
always do. But on the whole, the quarter is shaping up as one in
which a significant number of companies report record revenues
and profits. Traditionally, the quarter shows seasonal strength for
many technology companies, and this year, the period is shaping
up as even stronger than the seasonal trend suggests.
Market-research firms are reporting that demand for gear used in
fiber optics, telecommunications, wireless, broadband and chip
making is running ahead of even their last rosy projections. When
they reported their fourth-quarter earnings, many technology
companies raised their near-term growth rate projections and told
analysts that orders had climbed to record levels. That growth is
going to seem especially attractive given that growth at the
traditional blue chips is still constrained by a lack of pricing
power and declining margins.
In other words, I think the argument for buying technology stocks
on this dip is pretty compelling. |
