Craig, if you open your eyes I think you will see that most people on SI think the market will tank into October. So far, most people seem to be right.
I'd be delighted if you would suggest one commodity, apart from oil and gas, which will make people money over the next 3 years. I'd then like you to explain what the supply/demand situation is for this commodity while you explain to us why you think it is going to rise. Can you do that? I think your theory of a grand upcycle in commodities could do with some specific examples to support it.
The case for tech goes something like this:
The last few decades have seen remarkable progress in the manufacture of semiconductors. The feature sizes have gone down and the complexity and processing power have soared. This increase in capability has made possible the design of many new products which could not have been built in the past, and major new industries have been spawned. Some of the companies in these industries are very profitable and have produced hundred fold returns for investors who got in early.
The improvements in semiconductors continue today and seem likely to continue for the foreseeable future, although progress is becoming more difficult. It seems very likely that better chips will make possible new electronic products and hence new industries with very good investment potential.
Possible sources of future growth for tech:
1/ Broadband internet connections to every home, rolling out rapidly as I type.
2/ Cellphones for all, also rolling out now.
3/ PDAs, which like the PC in its early years, have limited uses at present, are sure to get better. When they get an affordable always on internet connection they will be really useful for e-mail and instant messaging. Also potentially useful for portable entertainment (mp3s and games), and maybe as maps, city guides and kiddy trackers.
4/ Wireless home and office networks replacing expensive to install and inconvenient cabling. This will allow sharing of one broadband connection among multiple users, helping to justify the cost.
5/ A reinvention of TV, with personal video recorders (PVR) and broadband internet connections allowing people to watch TV at their convenience, rather than when the network broadcasts. Perhaps you saw last weeks personal technology column in the journal, which talked about using a PC to drive your television? A PC could in theory use its processor to decode incoming digital signals wether from satellite, cable, DVD, digital broadcast or video on demand from a broadband internet connection. It could use its hard drive to provide PVR type functions and could use a search engine and an internet program guide to help you find something to watch or record or a video to download. If there is nothing to watch you could use the PC to play a game, chat on-line or play a CD or MP3. This will be a huge market if it ever happens.
6/ Digital television is coming, and it will provide more channels or higher definition pictures. The prices of digital TVs are much more reasonable than a few years ago and there is a far better selection. However, so far there is little high definition programming to watch.
7/ The management and operation of business will continue to be automated in pursuit of cost savings and competitive advantages. Storage, supply chain management and sales force software should pick up as the economy recovers.
8/ The rebuilding of the phone system will benefit companies like Cisco at the expense of the traditional telecom vendors.
I'd just like to clarify that although I am optimistic about tech long term I am not optimistic about the next six to twelve months. |
