| November 6, 2014 | Archives | Unsubscribe | | | | | |
 | | | The Tech Bubble is Ready to Burst --
And We Don't Care. Here's Why... | | | - Is it the year 2000 all over again?
- Finding the gems in the trash pile
- Plus: Booking your contrarian bets
|
| | | Greg Guenthner coming to you from Baltimore, MD...
 | | Greg Guenthner | "Tech is in a bubble. Get out while you can!"
That's what many analysts are screaming right now. Some are even comparing the tech sector to the heady days before the dot-com disaster of 2000.
And you know what? They might be right.
But it doesn't matter - we can make a bundle on tech stocks anyway. Because not every crazy tech stock, social media start-up, and software firm is a dud. And today, we're gonna cast our lots with some of the winners.
That's right, we're playing the tech sector.
Sure, things have gotten frothy in tech land. Venture capitalists are throwing millions of dollars at start-ups that have questionable prospects, just like they did back in the late '90s. That was during the "new economy," before the dot-com boom went boom. And things are starting to look pretty familiar...
"Note that the total investment amount is now back above $6 billion, where it was during the dot com crash of 2000," Business Insider reports. "The number of deals is smaller. That could be a good thing -- it might mean that investors are withholding dollars from companies they feel are weak. Or it may be a bad thing -- more dollars chasing fewer companies could lead to a situation in which those companies are massively overvalued."
Bingo.
So you can see why everyone and their mother is crying "BUBBLE!"
But I have news for you...there's some gems buried under the junk pile. Sure, there are plenty of new companies that are showing up just in time to get paid and get lost. But that doesn't mean you have to circle the drain with them...
While hundreds of millions of dollars are flowing into smaller start-ups that may (or may not) pan out, your trading dollars should stay with the very best companies in the tech world. Instead of trying to buy the lotto ticket stocks, stick with the tried-and-true names that have already showed investors tremendous growth.
Facebook (NASDAQ:FB) and LinkedIn Corp. (NYSE:LNKD) are perfect examples. Both of these companies are dominating their respective social networking niches. They have some of the smartest management teams in the business--and the growth to prove it.
No, neither Facebook nor LNKD are "cheap" by any standards. But what's important here is that they're beating growth expectations and proving they can win advertising dollars and dominate the web. You won't find these characteristics in any of the fly-by-night startups that are attracting some of this "bubble money" right now.
Even if this new tech mania begins to boil over, companies like Facebook and LinkedIn will only get stronger. So forget about bubbles and put your money in the best-of-breed names. Your portfolio will thank you... | | | | | | | | | As the Ebola epidemic spreads like wildfire in West Africa and the deadly virus has now surfaced in America, we've identified three Ebola stocks that could make you a fast fortune. | | | | | | | |  | | | | Rude Numbers | Targets, Predictions and Wild Guesses
| | | | 10,000 | fewer Americans went looking for work last week. Jobless claims dropped to 278,000. Now, the monthly average of benefit requests is the lowest registered since April 2000... | | $77.67 | buys a barrel of crude this morning. Oil is tanking again today. It's down more than 1% in early trading... | | $4.21 | is the price of natural gas. While oil plummets, natty is stair-stepping toward 4-month highs as winter approaches... | | $15.31 | is where you'll find silver futures this morning. Silver had taken it on the chin this week, dipping another 13 cents in early trading today... | | 2,020 | marks the spot for S&P futures just before the bell. Stocks are looking to register new highs this morning... | | | | | | | | Rude Trends | When to Buy... When to Sell
| | | "Thank you for that brilliant, contrarian bet on the Russell 2000 iShares (NYSE:IWM)," writes a reader.
This is the part of the email where my colleague Dave Gonigam over at the 5 Min Forecast would wait for that ever-present "but" - and then the complaint. So I must admit...I'm skeptical of this praise.
But please, Sir, continue...
"I immediately bought the shares, and based on your analysis, I also bought December calls on IWM and both the options and the IWM index are up smartly. Since they are nowhere near being overbought, I am going to wait a bit longer before selling half of both. Wonderful call!!"
That was unexpected. Thank you for the kind words.
To recap, we jumped on the small-cap trade at the market was bottoming out in mid-October. It was a tough call to make--but it turned out to be the right move. And I'm glad it worked out for you. After all, you deserve the credit for taking action. It's not easy to buy when everyone else is panicking.
So even though you couldn't find it in your heart to complain, I must congratulate you.
But...
Next time, if you could throw some criticism at the end of your note, I'd greatly appreciate it.
[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
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