"Isn't tech one of the most GDP-sensitive sectors?"
Bambs (bear in disguise), you know you are talking, in some ways, about tech before the early 1990's....large companies do not (necessarily) curtail/end tech purchases now because a little/some slowdown in sales...because companies have become convinced that implementation of best technology winds up making them FAR MORE money than it costs in the long-run...
Are you saying that telecoms are going to now end multi-year, decade expansion of their networks become GDP growth dropped a 1-1.5%? Hardly...
Also, we are talking about a growth slowdown from 5% to 3-3.5%...the elasticity of which (for tech demand) is...well..not so elastic...3.5% GDP is still really good growth...
Some low-tech could beat up (in a growth slow-down)...but, also, a lot of IT budgets have been freed up from the cost of Y2K fixes....so, in essence, the IT budget(s) have increased for non-Y2K spending....net/net....spending will likely remain up..barring a severe recession..
Michael Burke (of whom you are obviously a big fan) proposed that the dollar is going to tank real soon....Is it really? If so, where is that money going to go? To the Euro, the Yen? Things could change...but on a RELATIVE BASIS (and this is where I find fault with Burke's argument, in the short-term), the Euro and Yen are doing little to justify their strengthening vis-a-vis the dollar......Therein lies the answer to another of your questions....one must look at stocks on a RELATIVE basis....if the economy slows down.....with a strong dollar....vis-a-vis other stock alternatives, high quality tech stocks shine...for their growth is still outstanding while others (look at Home Depot, Goldman Sachs, and soon Coke and othe multi consumers) get beat up for their ever-slowing growth.. Bambs, some folks are just not going to invest in gold/real estate....it is either stocks or cash....and cash is only a resting place for most...
On a relative basis, tech stocks have become a lot more attractive...therefore, they are more a buy than ever..
foreign investors are chompin' at the bit to own high-quality US techs...they are (just now) seeing the technology revolution hit their countries..and they know many US companies are leading the way....the strong dollar is making them also feel good about parking assets here...
Somehow, I think you already knew all this already <G>?
Please do us a favor and do not post (potential warnings from) Seagate or IBM in the next month....those companies will be irrelevant to (what) Cisco will do this quarter... |
