Next week, the week of April 27, most of my covered technology companies report their financial results for the latest quarter. During these announcements, some firms will provide outlooks, or at least try to, for 2020. Others will suspend guidance because there is too much COVID uncertainty, and, honestly, no one, not even a scientist, knows for sure when this veil will be lifted. This is not all bad news. Remember, the market is a discounting mechanism, so prices mostly react to future developments. Think six months or more. Will our world be hunky-dory then? Of course not. No realistic person expects the economy to quickly return to full strength when the lights are turned back on. We recently made an updated post talking about this subject in more depth. Read the updated post; Tech Investor Paul Meeks On American Business 2.0 & Re-Opening The Economy.
Frankly, many analog businesses, particularly those that rely on foot traffic, will not return, or they will be zombies, so continuing to burn cash even post-COVID may be impossible. You could cry in your beer, or you could embrace American Business 2.0 and get a step on your competition. I will do the latter. I am thinking about ways to do so in every aspect of my life.
As a technology investor, however, I like my position, although I always can improve it. Combined, the Technology and Communication Services economic sectors accounted for 35% of the weight of the S&P 500 at the end of March. Furthermore, 10% allocated to Consumer Discretionary companies is dominated by e-commerce firms like Amazon. I think that it is game over as we enter a new paradigm. Technology, or, more broadly, digital innovation, has won. These organizations — they will not all be for-profit businesses — will increasingly dominate the landscape. You can always debate technology stock valuations, and, yes, some are egregious now, but I have never felt better about my sector’s positioning in any other “new world” transition. Invest in technology. Work in technology. Play with technology. You get my point.
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Investment Committee Member Paul Meeks was on CNBC’s Squawk on the Street to discuss his broad take on equity markets and government impact on certain stocks. Watch here!
Paul Meeks was in a Barron’s article regarding Arm’s IPO price and gives his thoughts on the nature of the valuation. Read here for details!
Paul Meeks was featured in a CNBC article explaining why he may buy certain tech stocks after the hype has ran its course. Read the article for details!