I forecasted a good year for tech investing for my Strategic Tech Investor readers.
After the tepid first quarter – a 0.7% contraction in U.S. gross domestic product (GDP) – you might think I'd adjust my prediction.
On the contrary, over the following months, I've shown readers how the technology sector has led the market higher and driven the overall U.S. economy.
So far this year, the tech-heavy Nasdaq Composite Index is up 7%, more than four times better than the Standard & Poor's 500 Index's 1.64% gain.
Plus, as we move further into the year, it looks like that grim first quarter was a "blip" – not the start of trend.
With that in mind, let's take a closer look at what caused that blip.
And then I'll show you some numbers that prove we're already bouncing back – and that will boost your tech portfolio for the rest of this year…
Poor Weather, Labor Disputes, and a Strong Dollar
A couple of relatively negative reports from the IMF and the Association for Manufacturing Technology have made some sour on second-half 2015 prospects.
First, in a June 4 report from the International Money Fund, the agency calls on the U.S. Federal Reserve not to raise interest rates until 2016. The reason: IMF officials say the U.S. economy has lost some momentum lately due to the strong dollar and a labor dispute at West Coast ports that slowed down shipping.
In April, the IMF forecast U.S. economic growth this year at 3.1%, but its June 4 report cuts that figure to 2.5%.
Then there's the recent report from the Association for Manufacturing Technology. The trade group says total U.S. tech orders in the first quarter declined 18.7% from the year-ago period to $399.8 million.
However, a closer look at that report indicates that the U.S. economy during the first two months suffered because of terrible weather throughout the nation.
The report doesn't come out and say just it, here's how I figured it out: After two anemic months, March orders soared some 30% from February.
And that's the bad news…
Strong Auto Sales
In May, automakers reported sales that were nothing short of a blowout. According to market researcher Autodata Corp., the industry had an annualized sales pace of a stunning 17.8 million vehicles.
That compares with an average sales rate over the past decade of 15.2 million and, if it holds out, would be the highest sales volume since 2001.
It may seem odd that as a tech analyst I would pay so much attention to auto sales. Of course, the auto industry has for decades played a critical role in the U.S. economy
But there's more to it than that. Vehicles have become rolling showcases of sophisticated technology. The "connected car" features everything from Bluetooth integration and Wi-Fi access to rearview cameras and in-dash infotainment centers.
Meanwhile, to boost sales and make vehicles safer, carmakers are adding advanced driver assistance systems (ADAS) – that is, self-driving features. I'm talking about such items as adaptive cruise control, lane departure warning systems, and front and rear cameras integrated with collision avoidance radar – all of which need software, sensors, and semiconductors.
May sales for Silicon Valley's only car company were off the charts. For the upscale Model S, sales climbed some 50% from the year-ago period to 1,652 vehicles.
The Brains of the Tech Economy
About the Author
Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.