Investing in tech now

We believe this is a great time to invest in technology companies.

The graphic below illustrates our rough view of the recent trends in the technology, real estate and resource financial markets and what we expect will happen over the next five years. (No, we don't think we can predict the markets. This is just our opinion based on what has happened in similar situations over the past several decades.)

The past five years have been the hangover from the 'irrational exuberance' of the late 1990's. Much of that irrational exuberance was due to the overheated tech market during that period.

When the bubble burst, the Fed reduced interest rates to protect the economy from the downdraft in the equities market. These low rates are behind the run-up in the real estate and resource markets.

Real estate and resources have been wonderful investments, but are now 'feeling very expensive.' Many market pundits expect rates to rise, and these markets to cool off over the next five years.

In contrast, the tech equities market is finally starting to show some signs of life again. Smart investors are cautiously starting to deploy some of the gains they've made in real estate and resources back into tech.

Tech fundamentals are also starting to recover nicely. Companies that have been putting off upgrades to their IT infrastructure are again investing to increase their competitiveness. Several new technologies are starting to create excitement in tech industry.

We believe that investors who deploy capital in technology this year, and for the next couple of years, will enjoy some excellent returns as the fundamentals continue to improve and investors 'rediscover' the gains that can be generated from high growth technology companies.

© Fundamental Technologies II - 2007