Tuesday, June 20, 2006

Big Computer Upgrade Cycle Getting Underway--Smart Investors to Prosper

The new Microsoft Live Messenger will require a "multimedia" PC; at least a Pentium 233 MHZ or faster machine. It will need 256 MB of Ram and it will take 50 MB of hard disk space just to load the program! Compatible equipment that will make the experience enjoyable will included super high speed broad band connections with high speed wireless routers. The computer on which I am typing, while only a few years old, is inadequate in this new media world.

Investors should buy selected technology shares aggressively. The market will lead the upgrade cycle. The current market rotation is largely about switching from value stock leadership to growth stock leadership.

Stocks are very attractively priced. They are so cheap that world wide merger activity will likely set an all time record this year. Corporations are flush with the cash produced by very high profit growth. Many are wisely buying competitors rather than building new capacity. The activity is in all sectors, from software to the oil patch. Oracle is a great example. This company has bought dozens of competitors over the past 5 years of tough times in the software business. When the upgrade cycle leaps into second gear, this company will be sitting in the cat bird seat.