Why Old-School Tech Tops "Social" Stocks

Return of the dot-com darlings July 23, 2014     Why Old-School Tech Tops "Social" Stocks   Return of the dot-com darlings Two old competitors rake in the gains Plus: Is Russia worth a quick trade?   Greg Guenthner coming to you from Baltimore, MD... Greg Guenthner While many of the newer social media stocks struggle for gains this year, old-school tech stocks have become some of the best trades on the market. With the rare exception (Facebook is doing well--shares are up 26% year-to-date) the social stocks are in the gutter. They got off to a fast start in January and February, but ran out of steam in the spring. Aside from a few feeble attempts, few have posted anything close to a noteworthy comeback. Twitter, LinkedIn, and Groupon are all down double-digits year-to-date. Groupon--the worst performer on this short list--is down 47%. On the other had, the biggest of the big tech stocks on the market are helping traders pile up even larger gains right now. "Along with Intel, 'old Tech' stocks that were once speculative names like Microsoft (MSFT), Hewlett-Packard (HPQ), Adobe (ADBE), Cisco (CSCO) and Applied Materials (AMAT) are having stellar years," reports Bespoke Investment Group. "Earlier in the year, investors began flocking to these now-stable Tech companies when the 'new Tech' momentum-trade took a tumble. While the speculative names have certainly found a bottom since the March-May pullback period, the old Tech stocks have continued to act well." While many social media and other "new tech" names are well off their highs, the stodgy veterans that survived the 2000 tech bubble crash are back in favor in a big way. These growth-turned-value names are back in growth mode--and it's about time. While almost all of the names in this space are back above their 2007 highs, many of them are still trading well below the bubbly share prices we saw 15 years ago... "Trade of the year" candidate Apple Inc. (NASDAQ:AAPL) has posted gains of 20% so far this year, compared to the S&P 500's rise of about 7%. The Global X Social Media Index Fund trails them both by a wide margin. It's down about 10% so far this year. Last night, Apple reported its second straight quarter of double-digit growth in iPhone sales. A positive reaction to the news could help send Apple shares back into triple-digit territory for the first time since its 7-for-1 stock split. Then there's Apple's old-school competitor, Microsoft Corp. (NASDAQ:MSFT). Microsoft is also up by more than 20% this year. Its latest push higher comes courtesy of layoffs announced last week. Microsoft is looking to streamline its business, including its newer Nokia division. Investors loved the move, bidding shares up 5% before the week was up. If you're digging around the tech sector for a trade, steer clear of the social stocks and their so-called comeback attempts. These old-school tech trades offer everything you could possibly want: performance, momentum, and even a few good values...         CONFESSION: Ex-IRS Agent Secrets Revealed He spent 29 soul-crushing years behind the walls of the most feared and despised agency in the United States -- the IRS -- discovering every tax secret and investment strategy known to man. Until one day he vanished… Thanks to one little known discovery he made at the agency…he suddenly walked out and took an early retirement. Ever since, he's dedicated his life to exposing this secret the IRS would prefer you didn't know. A lot of people hate this man… but you'll love him after you SEE THIS.           Rude Numbers Targets, Predictions and Wild Guesses   $707 million was enough for Blackstone Group to buy Max Property Group's assets yesterday. According to Bloomberg, Max Property's stock climbed the most since May 2009 after the announcement... $531 billion worth of Saudi stock will become available to foreign investors next year. Saudi Arabia's Tadawul All Share Index climbed to a six-year high on the news... $102.50 buys a barrel of crude today. Oil is cooling off a bit after its quick run-up to $105 on Middle East tensions... $1,307 marks the spot for gold futures. Gold has found itself in a holding pattern after breaking above $1,300 last month. It's up about $1 in early trading... 1,978 is where you'll find S&P futures just before the bell this morning. Stocks are set for another green open...     Rude Trends When to Buy... When to Sell   "The Market Vectors Russia ETF (NYSE:RSX) might be worth a nibble on the trendline (around $23) with a tight stop," writes a shrewd reader. Yeah, that's not a terrible trade at all--as long as you have the discipline to cut it loose if it turns on you. Russia is in a very interesting situation right now. On one hand, you have one of the cheapest markets in the world that looked like it was bottoming out and headed higher just a couple of months ago. However, the situation changed--and we have to adapt accordingly. Cheap can always get cheaper. And with the risk of additional sanctions and other potential surprises piling up, I just think there are better trades out there right now. The most important thing you can do as a trader in this situation is to go into your trade with a plan. Decide beforehand what you will do if shares begin to drop below a certain level. And understand that you're going to have to deal with what could potentially be some serious volatility. If you can handle it (and you have time to monitor the trade closely), then go for it. But I don't see Russia as a "set it and forget it" long-term trade anymore. If you can't give it attention every day, you'll want to look elsewhere for a less volatile opportunity... [Ed. Note: Send your feedback here: rude@agorafinancial.com - and follow me on Twitter: @GregGuenthner]     Ignore At Your Own Peril Today's Must Read Links   Oil-Industry Veteran Reveals 6 Plays to Get Rich Fast Here's how to have a shot at 500% gains! Do You Have Any of These Coins in Your Pocket?     BE SURE TO ADD dr@dailyreckoning.com to your address book.       Additional Articles & Commentary: Join the conversation! Follow us on social media:         The Rude Awakening is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to Agora Financial delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from The Rude Awakening, click here. Please read our Privacy Statement. For any further comments or concerns please email us at rude@agorafinancial.com. 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