Monday, 15 October 2007

Tech indices hit 2007 highes

You might have to pinch yourself,, but both NASDAQ and the Techmark hit 2007 highs last week. NASDAQ, at 2805, is now up 16.2% on the year (indeed it is up nearly 4% in October alone) and Techmark hit 1750 on Thursday - up 15.5% on the year. Vodafone is the largest ingredient of Techmark and its shares have done (recovered) really well - up 27% in 2007 YTD. These gains compare with an 8.2% increase in the FTSE100.

I have said several times before in HotViews that, in the past, tech acted as an 'amplifier' to general stock swings. Does extremely well in good times, does awfully badly when the general market turns down. This time, tech has bucked that trend. Many believe that tech is a safe haven in the storm that lies ahead. I am becoming increasingly of the view that this is the case. I see consumer tech spend (the main driver of the recent rallies) holding up even if there is a more general downturn. People will rush to their games consoles, iPods and home entertainment gadgets as solace when they can't afford the holiday or restaurant meal. All things that feed this stuff into the home - Cisco would be a good example - should do well too. We all know that enterprise IT is a tough place to be. But it has been such for seven years now and we are all used to it. Consolidation (and haven't we seen a mega week for software consolidation!), cut cutting via offshoring etc should provide good stock buying opportunities.

As readers know, at the beginning of 2007 I joined the board of what was then Finsbury Technology Trust - which had significantly underperformed the market and its peers. One of my first tasks on the board was to help select a new fund manager - Walter Price and his team from the $3b US RCM Technology was selected and we are now known in the UK as RCM Technology Trust plc (RTT). The fund has been realigned into larger global tech stocks. The performance since has been exemplary. Since RCM took over management of the fund on 1st May 07, the NAV is up 19%. We also undertook a 5 for 1 Subscription issue. So shareholders on 1st May are now similarly looking at a 19% increase in their investment. This has beaten all the tech indices in the period and is miles ahead of the performance at comparable tech funds like Polar and Herald. It's been an interesting - and rewarding - experience for me. Just hope it continues!

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