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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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All opinions expressed Paul Meeks are solely Meeks’ opinions and do not reflect the opinions of Independent Solutions Wealth Management, LLC (“ISWM”). You should not treat any opinion expressed by Meeks as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion for educational purposes only and does not constitute investment, legal or tax advice, an offer to buy or sell any security or insurance product; or an endorsement of any third party or such third party’s views. Meeks opinions are based upon information he considers reliable, but neither ISWM nor its affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Meeks, ISWM, its affiliates and/or subsidiaries are not under any obligation to update or correct any information provided on this website. Meeks statements and opinions are subject to change without notice. No part of Meeks compensation from ISWM is related to the specific opinions he expresses. Past performance is not indicative of future results. Neither Meeks nor ISWM guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment discussed. Strategies or investments discussed may fluctuate in price or value. Investors may get back less than invested. Investments or strategies mentioned may not be suitable for you. This material does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. Before acting on information, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from an investment adviser.
Another week. The rally continues for U.S. stocks, and I think that it can go further if the S&P 500 breaks through technical resistance at 3,000.
If you read this blog, you know that I’ve been waiting for the major tech companies that I cover to announce their March quarter earnings. For the “FAANGs,” which includes Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), and Google (GOOGL), and to which I’d add Microsoft (MSFT) to this group of tech titans