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Fisher Investments on Technology by Andrew Teufel, Brendan Erne, Fisher Investments

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Chapter 3. TECHNOLOGY SECTOR DRIVERS

In this chapter, we'll outline some of the most important macrodrivers for the Technology sector. There are three broad categories of drivers you can use to examine the forward-looking prospects for any stock market sector:

  • Economic drivers

  • Political drivers

  • Sentiment drivers

We'll start by assessing the economic drivers most applicable to the Technology sector. While much of this discussion will center on the US, the principles can be applied to any country.

ECONOMIC DRIVERS

Macroeconomic indicators take the pulse of the economy. Whether it's jobs numbers, GDP, or inflation readings, they help paint a picture of the current state of the broad economy. And they can help you shape expectations about the economy and how it may impact Technology looking forward.

Deciphering economic data isn't easy. Economic reports can be volatile, contrast one another, and are often subject to later revisions. And economic data are usually inherently backward-looking—the data report on what just happened in the past quarter or year; they don't tell you what's likely to happen in the future. Markets discount economic news with astounding speed, so investors don't need to know what just happened—they must consider what's next.

So how do you use macroeconomic data to your advantage? By staying abreast of the most important indicators and asking whether present conditions are better or worse than reflected in investor sentiment and market prices. Then, consider where you ...

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