When you get a streak like technology's had here -- and I am including the Nasdaq as a barometer of tech, with its 11th consecutive positive close -- you have to ask yourself: Is there something going on that's even bigger than the visible themes? I'm talking something beyond low inventories for semis, new product cycles based on Internet mobile, and valuations that got out of hand to the downside.
And I think I have it.
Washington doesn't care about tech. Tech can do what it wants. Tech's not unionized, so Card Check and arbitration, the next battleground, doesn't affect it. Tech doesn't pollute much, so cap-and-trade doesn't mean much. Tech's not much for pensions or for any help from the government with health care. It has virtually no legacies and is largely 401(k).
Tech doesn't sell products that increase the budget (such as defense companies) or that make Medicare too expensive (such as drugs, biotechs and health care maintenance organizations).
And most important, tech doesn't need government financial help. There isn't a single bailout or even a hint of trouble with any tech company and no tech company is too big to fail. It doesn't offer products that need government regulation because they are unsuitable. It isn't regulated by a government agency like the Federal Communications Commission or the Justice Department's antitrust division or any of the various czars.
Its profits haven't been looked to as a way to tax our way out of our deficit, as I think all oil and gas companies must feel. It isn't about to be legislated out of existence, as coal or tobacco might be. It's not the subject of snack food or soda taxes. It's not about to be pitted against other competitors, a la the drug stocks.
These matter. Many portfolio managers want to own stocks so they can sleep at night and not wake up worried. So many companies fed at the public trough during the Bush administration that they are now being slowly starved to death with shrinking price-to-earnings multiples. Few companies are as international as tech, and Asia is often bigger than the U.S. as a market.
They can build the stuff anywhere and the moment there's anything really onerous -- pesky and expensive work forces, state taxes that are abominable (think California) -- they can move.
No wonder Intel (NASDAQ: INTC) (Cramer's Take) and Cisco (NASDAQ: CSCO) (Cramer's Take) and Apple (NASDAQ: AAPL) (Cramer's Take) and VMware (NYSE: VMW) (Cramer's Take) and Oracle (NASDAQ: ORCL) (Cramer's Take) and Google (NASDAQ: GOOG) (Cramer's Take) -- not to mention software companies like Allscripts (NASDAQ: MDRX) (Cramer's Take) or all of the little semis I like such as ON Semiconductor (NASDAQ: ONNN) (Cramer's Take), Skyworks (NASDAQ: SWKS) (Cramer's Take) and TriQuint (NASDAQ: TQNT) (Cramer's Take) -- are doing so well.
Their businesses aren't defined by what the president says or what Nancy Pelosi says, but what's in the business pages.
So people will pay more for their earnings. This is the first time I can ever recall where this group can shine simply because President Obama's agenda is so anti almost all other sectors. That's why it can keep going higher when things get better because almost every other area is affected by Washington.
It's a break that should last a very long time ... perhaps as long as three-and-a-half years.
Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long Cisco and VMware.
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Reader Comments (Page 1 of 1)
7-23-2009 @ 10:04AM
ij70 said...
This does not make any sense. Most of the "tech" is luxury products. People do not buy luxury products when they do not have a job (me for example), people do not buy luxury products when they pay the bills and save the rest because they are worried about future.
Let us look at some examples:
intel--produces wide variety of electronics (cpu, gpu, network chips, controllers), however, they sell all this products to others and those others are going to have lower sales because people are saving their money.
Cisco--produces network products. Ask yourself, what is wrong with my network hub? Network router? Network switch? Nothing. You used them for the past 5 years, they will be good for the next 10 years as well. And we are talking personal lan and business lan, there is little turn over in network products. Nobody is going to run to buy new set of network products every two years or so.
Tech stocks will be ok, at least the big ones like intel and Cisco since they make a lot of stuff that public does not really hear about.
7-24-2009 @ 2:52AM
ME said...
It's true. At least there are still some things that don't need or want government's paws into.
Find which Tech businesses are doing the best.
7-23-2009 @ 2:02PM
IPlatotle said...
Luxury items are doing great. I just heard a stock recommended on CNBC the other day for a company that sells handbags starting at $10,000 each. There are still people who have a lot of spending money even if most don't. And that's why we are where we are, I believe. Too much money in too few hands, just as it was in the 1930s.
I regret Obama rarely mentions that. I fear he actually believes things are improving and doesn't realize he's been set up as the fall guy for a wealth transfer that can't be sustained. . . well, that is if bad times are still measured as they were in the '30, because the stock market was rising then. It's just people had different values of what constituted improvement which involved consideration for all people rather than a few.
I remember the most vociferous tirade I've heard Cramer engage in was after Lehman went down and AIG was in danger. He demanded the government not permit that to happen and screamed, "They know nothing!" I figured that outburst would have influence and felt AIG was a great bet at that time.
Sure enough, within a couple days after Cramer's outburst, the government had arranged to give AIG a big loan.
Before I heard anyone else do so, Cramer led the charge for bailouts. So I see him as a hypocrite, not that I don't still listen at times. He was right about the need for bailouts, after all. It's only unfortunate he's in denial about that.
7-26-2009 @ 1:24PM
Leon Benner said...
our states shoud try to stop the government from a complete take over, no states right, this last police thing, Crowley, is the last staw, we don't want a central goverment, we could have had that in 1775, what the hell was all the wars about, and all the dead people, jost to give it away to some tin horn politicion Thamas Jefferson
said, " I predict future happiness for american if they can prevent the government from wasting the labors of the people under the pretense of taking care of them-Thomas Jefferson"