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Now that the election is over, the real question facing tech investors is the same today as it was in January 2009 — how to play the Jobless Recovery.
Clearly, the stats show a modest rebound — weak progress on jobs that is just slightly ahead of population growth.
I still see a sluggish economy for the next few quarters. We haven't had any news out of Washington — from either party — to give employers the confidence they need to hire in a big way.
Now, with Obamacare kicking in along with new regulations on banks and finance companies, I believe that trend will continue.
If you look at the charts for any of the major indexes, you can see that the last several months show a lot of mood swings based on news about macro factors.
I'm not suggesting it will be highly volatile in the months ahead. But for at least the next couple of quarters, we're likely to see a choppy, news driven market.
Looking at the big picture for investors, I think it is vital you focus on firms that have strong earnings, solid operating margins, and low debt.
Investors have no patience for any stock that misses earnings forecasts. So, if you buy a stock on the belief it will surprise on the upside, you better hit the nail on the head. Or you'll get crushed.
When it comes to technology, a second Obama term will be just like the first — there will be winners and losers.
Yes, the mobile wave will continue. The movement from desktops and laptops to handhelds is an unstoppable force. That means the Old Guard of Tech will continue to see its markets eroding.
Cloud computing also should do well. The growth drivers are simple — the mobile wave and the need for firms to convert to an all-digital format. Also, firms need what's called Big Data so they can crunch numbers to tailor their products to new buyers or find whole new markets.
In my mind there's no question a second Obama term will keep many defense contractors in check in the short run. You'll need to keep an eye on firms that have a big pipeline of funded contracts the Pentagon is unlikely to cut.
It may take some time for defense stocks to get completely re-priced. However, I think that by the second quarter of next year, we will have budget clarity. And that should give the sector a bump.
Let me close by noting some other bright spots ahead. In defense, I see growth in cyber security, electronic warfare, drones and the systems needed to make them.
In health care, firms focused on information technology also should do well. That's because Obamacare will force firms to keep a lid on rising costs, and health IT can play a big role in that effort.
And finally, the pace of American innovation will remain vibrant. We have a lot of bright minds out there always looking to invent the Next Big Thing.
That's the history of U.S. technology. And no matter who is in charge in Washington, that creative force will keep bringing us new breakthroughs — and investment opportunities.
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About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top technology financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
Michael is 100% independent and receives absolutely no compensation from companies he writes about. His ideas are completely his own.
So, it probably goes without saying that you won't ever be left in the dark about breaking innovations, ahead-of-their-time technologies, and breakout companies on the cusp of changing the world once you join this world.