How much does the economy really matter to technology? If you think there is a real slowdown, should it matter? Do you have to pare back? At Cramer Berkowitz, we have always been of the opinion that -- for the most part -- we do not care that much about the macro for the highest-growth tech. We don't think that the worldwide rollout of wireless or high-speed broadband is that cyclically sensitive. As long as the economy is not too hot or cold, high-tech stocks will work.
But we recognize that technology has a spending component to it. Yesterday, at the
conference, I talked about the notion that if the
were to tighten two more times, I believe the economy would slow to the point where I would be worried about the order book at a
, two of my favorite companies.
Right now we aren't that worried. We think the Fed will not be so vigilant that we have to worry about the macro. In fact, we think that as long as the gross-domestic-product growth stays above 3%, we aren't going to be concerned about our high-growth tech.
But we are in the minority of those who invest in tech on this view, I think. Most of the dedicated tech players (not us, we invest in everything) are loathe to acknowledge any cyclicality at all. Paul Wick, from the
funds, notes that he sees no correlation with economic growth and his stocks. Wow, that would be super.
We can't go that far. I don't think Paul would have feared two or three more tightenings by the Fed. We would be shaking now if we had them. This debate over sensitivity of tech spend to the economy rages back and forth at times like this when the Fed is going for a soft landing. It happened in
1994 just like this. The tech bulls won. They will win again.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Cisco and Nortel. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at