We didn’t make it. (But we did amplify it here on February 24th.)
The points made by GaveKal in February for technology shares leading the market were indeed compelling and the past month of market action has been nothing short of spectacular.
Technology companies are cash-rich as a group, offer a cheap call option on global growth, are taking an increasing share of consumer spending and used to operating in tough environments where lower prices (and costs) are part of doing business.
Combined with the fact that technology stocks were at very low valuations in Feburary it was easy to get “long and strong” the sector.
At this point it’s tempting to take the chips and go home. But most of the names we follow are still below our estimates of fair value so while it makes sense to adjust positions it doesn’t feel like this trend is over. Given that we are so focused on technology we try extra hard to be objective.
We were astonished to read articles like this Why Tech Stocks Won’t Lead The Next Bull Market. These guys are about 10 years behind the curve because the focus on names like Microsoft, Oracle, Yahoo and GE as the “leadership names.” What? People like this should be given a one-way Internet connection! 
These stocks may have to take a breather but most of the ones we look at still look attractive on a fundamental basis.
[Disclosure: Research 2.0 is long many technology stocks.]
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