Technology Sector To Lead Next Bull Market

| February 11, 2008 | 0 Comments

“Hey, check this out” a friend of mine said as he thrust his new watch in my direction. We were meeting for a quick drink after work. I was debating how much longer rush hour traffic would clog the freeways, and he was excitedly talking about his new business venture. Our discussion quickly turned to his new “toy”.

Cory recently purchased a watch that cost more than some cars. As a successful businessman he was no stranger to expensive toys, but this was different.

Along with his success in business came a desire to participate in activities a little out of the ordinary. I don’t know if he skydives, but he’s an avid back country snow skier and talks frequently about sailing the ocean. After getting his airplane pilots license, he started learning how to fly helicopters. Needless to say, he has an amazing lifestyle and his new watch fits in perfectly.

In addition to being beautiful and a real work of art, the watch Cory now wears contains an amazing bundle of technology. The little device contains an emergency beacon with a GPS locator. If he is ever lost in the wilderness, or at sea, he could pull a little pin to summon help.

When that pin is pulled, technology in the watch takes over. Determining his location it sends out an emergency signal. Rescuers are notified and given his GPS coordinates, all to save his life.

That little watch got me thinking.

Technology has become so ingrained in our daily life that most people are oblivious to it. Cell phones, televisions, and computers are what people think about when they hear the word technology. But, technology goes much, much deeper.

It’s at the gas station allowing us to “pay at the pump”.  It’s in our grocery stores giving us faster checkouts and providing detailed inventory tracking.  Technology is in our cars – and now watches – with GPS tracking.

Think about it.  All of our financial and medical records are created and managed with software.  Software that we never see but impacts our daily lives.  To top it all off, massive amounts of information need to be stored, requiring yet more technology.

Here’s the part not everyone is aware of.

Technology has become a leading indicator for the stock market.  Don’t believe me?

October of 2002 was the bottom of the last bear market.  Back then everyone was looking for an industry to lead the markets higher . . . and we found it in technology.  Over the next 2 years, the technology industry represented by the Technology Select Sector SPDR (XLK) significantly outperformed the Dow Jones Industrial Average.

In my opinion, technology stocks are going to lead us out of the current market downturn.  This may already be happening, and I plan on watching these stocks very closely over the next few weeks and months.

By the way, Gregory has a great option idea this week in the technology sector for subscribers to his Option Forecast service.  It’s a company that makes hardware that every company (and computer user) needs and should do well despite the economy.

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Category: Stocks

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The Dynamic Wealth Report works with a number of staff writers and guest experts who specialize in everything from penny stocks to ETFs to options trading. These guest analysts post under the 'staff writer' moniker for ease of use.

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