but what are the indications you are looking at supporting the market not going up?
I only really look at tech, so my view is more that tech will underperform the market than the whole market going down. If the market is up 20% in 2006 tech will likely be up, just less than 20% in my opinion.
My downward bias is based on a slowing revenue environment among large cap tech. In 2005 IBM, CSCO, DELL, LXK, SUNW, NTAP and missed or lowered estimates during the year. As far as I can tell that trend is more likely to continue than reverse. The only hot major product area in tech as far as I can tell is cell phones. So I expect the trends of slowing PC, hardware, services, printer, storage, etc to continue in 2006, and we've got potentially negative currency trends hitting the multinationals. Tech as a whole still has a PE of about 22x versus the market at 15x, but tech growth rates don't seem to justify it. I could be wrong, but I think once the Q4 rally finishes then we will be back to lackluster revenue growth in 2006 and relatively high valuations, translating to tech stocks underperforming.
Outside of cell phones and internet, there aint much exciting stuff going on in tech, and plenty of price pressure.
Its not a huge conviction view, but it makes more sense to me than the upward bias stories I hear. |
