Question:
I keep hearing that “technology” is a leading indicator for economic recovery. If so, then we are in trouble as the sector has done poorly so far this year, and the future doesn’t look much better. Am I missing something?
Tech Player from Chipville
Answer:
Actually, “yes” and “no” both answer your question. No, you are not missing that our economy is still floundering around at what many have already called “the bottom” and the technology sector is right there in the middle of the swirl. Yes, you are missing something—patience. Although tech is doing poorly now, it will be one of the premiere sectors for trading when the economy stops bouncing off the bottom and actually begins to recover in a meaningful way.
(June 30, 2009) As bad as the technology market fared in the first quarter of this year, the worst may be over, at least in the United States, Forrester Research said in a report Tuesday.
The article goes on to say that Forrester Research has revised its forecast on the U.S. technology market, changing it from a 3% market drop to a 5% market drop; however, as with the rest of the economy, less bad news is really good news.
Businesses and governments overreacted to the global recession and credit crisis, Forrester said, by cutting back too much on spending in the past nine months. As companies realize that the recession is not as deep, or as long-lasting (sic), as they feared, they will resume technology spending.
The research firm expects the U.S. tech sector to hit bottom in the third quarter and to begin its recovery in the fourth. Whether this is true, I don’t know. What I do know is that the technology sector is poised for the most explosive growth since the tech boom of the nineties. Better still, it won’t be the “smoke and mirror” and “vaporware” type of growth we saw in the nineties. The coming expansion of technology is rooted in the foundation laid by the 90s tech boom, and the growth will be fueled by innovative products that actually exist to improve healthcare, manufacturing, and computer technology, to name three prime areas. Be patient, technology will not let you down.
Trade in the day; invest in your life …
