While the Dow, S&P 500 and Nasdaqhave all enjoyed quite a run over the last two weeks, 2009 is shaping up to be a tale of two markets: Nasdaq and everything else.
Nasdaq is up over 20% this year, about four times more than the S&P and 20 times more than the Dow.
I was talking to some “buy side” contacts recently about the rally in technology, and many believe it is about the so-called “re-set economy” in which companies are looking for ways to be more efficient to lower costs.
Technology can help do that.
These sources told me that this is a big theme, and it’s one reason they believe the tech rally continues. (It’s interesting to note that, even with the run-up this year, Nasdaq still has to gain more than 150% to match the high from early 2000.)
One of the people I talked with was Robert Zagunis from Jensen Investment Management, which currently has 200 million dollars under management.
He told me that companies don’t want to cut to the bone, but they do want to be as lean as possible.
As a result, they are increasing their spending budgets for Information Technology to try to make that happen.
Investors know this and are buying tech stocks.
He made another comment that I found very interesting.