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Monday, September 24, 2012
If you own Big Cheap Tech, you're making money... and the trend is now your friend.
For nearly two years, we've encouraged readers to get interested in "Big Cheap Tech." And last month, we noted these stocks had recovered from the market's spring drop and were "breaking out" to new highs.
The trend here is UP... and it's not too late to buy.
When we say "Big Cheap Tech," we're talking about America's leaders in tech-related industries, like software, Internet infrastructure, and personal electronics.
As we've mentioned many times, most of these "dominators" (like Microsoft, Cisco, and Apple) are cheap relative to their annual cash flows. Plus, these blue chips have huge cash piles on their balance sheets.
And investors are catching on...
A good way to gauge this sector is with popular tech fund QQQ. This fund has large weightings in these dominant companies... like the names above, along with Google, Oracle, and Amazon.
Like most assets, QQQ enjoyed a big rally to start the year. It declined during the spring... and spent several months "digesting" its loss. But as you can see from the chart below, QQQ followed its August "breakout" with another step higher.
Although the broad market is due for a short-term decline, the government's "easy money" stimulus efforts will likely continue to drive stock prices higher over the long term. And owning these cheap, dominant businesses remains a good way to ride this trend higher.
Stay long Big Cheap Tech.
– Amber Lee Mason and Brian Hunt
Back in June, Steve Sjuggerud showed DailyWealth readers how to get shares of Cisco – and other dirt-cheap Big Tech companies – for free. Readers who took his advice are looking at 20% gains on this group of stocks in less than four months. Get the full story here.
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