CNBC.com Stocks up

While the Dow, S&P 500 and Nasdaq have 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.

I asked Robert how important he thinks it is to invest in international economies, or whether investors should just stay domestic.

His response: You have to go fishing where the fish are.

That means growing areas like China, Latin America, and India, but Robert likes investing in those hot spots through American companies. “The profile of the individual country and whether they are receptive of products is one way we look at the international markets,” he told me.

As an example, he said to look at the Coca-Colas of the world and where they are selling, and you get a sense for where the opportunities are. A couple of other great examples are Freeport-McMoRan and Caterpillar. The CEOs of both companies just told me on Tuesday that China is critical to their businesses.

Finding Opportunities

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“Sometimes it will be Eastern Europe; sometimes it will be China,” he said. “It’s based on the individual companies. Our approach is not to just go buy stocks on the Shanghai exchange but to look for domestic companies that operate in those hugely populated countries.”

Robert also said you often get better accounting and transparency from American companies than for those listed on many foreign stock exchanges, and you also push the foreign exchange issues onto the management of those companies. “Its the way we have chosen to participate in the foreign markets – strong, quality companies that happen to be headquartered in the U.S. but have a lot of activity in many countries. And those opportunities change over time.”

He, like others, is watching closely the 1.3 billion people in China that he expects will eventually become big consumers.

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