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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Donald Wennerstrom who wrote (36073)	10/1/2007 1:36:41 PM
From: Donald Wennerstrom	Read Replies (1) \| Respond to of 95572

Also out today from Credit Suisse is their outlook for tech stock performance for the 4th Quarter. <<3Q'07 Tech Stock Performance Bottom line: We entered the year bullish on Tech, and have been rewarded with relative outperformance compared to the broader market. Year to date, the CSTI Index is up 17.5%, nearly 1000 bps ahead of the S&P 500, which is up 7.6% for the year. Looking specifically at 3Q performance, the CSTI gained 6.7% for the quarter, compared to just a 1.6% gain for the SPX. Despite the large outperformance in the last six months, we continue to be positive on Tech heading into 4Q given both current fundamentals, as well as the historical propensity for Tech stocks to outperform at the end of the year. 3Q Tech Outperforms by over 500 bps: Although the quarter started off volatile, tech stocks performed nicely in 3Q, with a 6.7% return, versus just 1.6% upside for the S&P 500. The strongest performance came from the large cap tech stocks, which gained 7.7%. This compares to just a 1.2% gain for the mid-caps, and just barely gaining at all were the small caps, which returned just 0.2% for the quarter. The historical average for 3Q performance for tech stocks is -3.5%. While the Fed rate cut likely helped stock performance in September (+4.6% m/m), we note that August also had exceptionally strong performance as well, with a 2.8% gain for the month. Look for Continued Outperformance in 4Q: Heading into 4Q, we take a look at historical performance to see what we might expect in the last quarter of the year. Over the last ten years, tech stocks have returned on average 15.0% during the fourth quarter, compared to 7.6% upside for the SPX. Despite the very impressive, and above average performance by tech stocks in 3Q, we believe that there is ample room for continued upward movement in stock prices throughout the end of the year, which is consistent with historical averages. Assuming a usual year end budget flush on the corporate side, and the seasonality typically associated with holiday spending on the consumer side, we remain optimistic that Tech stocks will continue to outperform the broader market. (Moreover, we note that our economic team is projecting at least one more Fed rate cute before the end of the year, which should also provide an additional catalyst.)>>