Daily Bullets…….For April 24, 2014

·         Tech Bubble Redux…….Some pundits in the financial media are calling for another “tech bubble”. It makes for great copy and catches peoples’ attention. We’ve stated before that we think there are pockets of froth in areas like social media, but certainly not in “legacy” technology (i.e. storage, semiconductors, application software, etc).

What’s the Point? We do not believe there is a bubble in legacy technology. Our investments in technology are diversified quality holdings that we believe continue to offer value to our clients based on valuation and growth potential.

Link: http://finance.yahoo.com/blogs/breakout/david-einhorn-cries-tech-bubble-but-the-end-may-not-be-near-145245734.html

·         More positives for economy…….March durable goods orders were stronger than expected and well ahead of economists’ forecasts. “Core” capital goods orders (excluding defense and commercial aircraft orders) increased a robust 2.2% reflecting further broad-based expansion of the manufacturing sector following the weather-impacted Q1.

What’s the point? Manufacturing has been a key driver of the economic recovery. Given what we expect will be further restrained consumer spending, we believe growth of manufacturing will be important to sustaining the economic recovery.  Link: http://money.msn.com/business-news/article.aspx?feed=OBR&date=20140424&id=17548330

·         Economy at “inflection point”?…...One economist is stating today that the economy may be on verge of accelerating. He bases his opinion on recent strong earnings reports and outlooks provided by several large manufacturing companies. We agree that these earnings reports have positive implications for acceleration in the economy.

What’s the point? This information supports our earlier belief that the economy would continue to improve and, in fact, accelerate as we move through 2014. This also has positive fundamental implications for stocks, as it should help to sustain healthy earnings growth. Link: http://money.msn.com/business-news/article.aspx?feed=AP&date=20140424&id=17554648

 

·         Small investor returning to market?.......We noticed an article today that provided some data that small investors are stepping up their investment in stocks, or at least their activity in stocks. The article attributes this to increased confidence in the market on the part of retail investors.

What’s the point? Euphoria and high confidence levels on the part of small investors is generally viewed as a negative sign for contrarian investors. We don’t see this as a big problem now, however, it bears watching. Link: http://www.cnbc.com/id/101611794