Seven "C"s will help keep the tech sector afloat and enable its recovery by the end of 2009:
Cost-reduction initiatives -- The purchase of equipment and software can boost productivity.
Competitive forces -- To maintain competitive advantages, companies can't risk falling behind investing in the best equipment and software.
Capital depreciation -- The depreciation rate for information-processing equipment is much faster than for other types of machinery, which will tend to sustain investment in technology equipment.
Controlling inventory -- Businesses recognize that having the best technology in place helps them to keep inventories from increasing undesirably, a risk in an economic downturn.
Capital deepening -- Businesses recognize that their return on capital is generally good on spending on equipment and software.
Cyclical forces -- The technology boom that began in the mid-1990s is secular, which means it will rebound when the economy does.
Cultural fabric -- Consumers and businesses simply love new technology. Have you ever walked into an Apple (AAPL - commentary - Cramer's Take) store?
At the time of publication, Crescenzi had no positions in the stocks mentioned.
P.S. Will you be there when Cramer makes his next move?
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Tony Crescenzi Blog Jobless Claims Plunge 12/31/2008 9:00 AM EST Still, take the latest readings with a grain of salt.
Tony Crescenzi Blog CPR for Asset-Backed Securities 12/30/2008 2:41 PM EST Fed and Treasury moves will likely expand credit.
Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of the revised investment classic, The Money Market,
first published in 1978 by Marcia Stigum, and The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
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