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(Hulbert tracking to 2013 of over 400 investment newsletter portfolios)

Dear Investor,

Investing in the stock market over the past several years left investors wondering if having money in the market was the smart thing to do.  It was no wonder. 

The market felt the hit of the financial crisis and left many on the sidelines for the inevitable recovery.  What was the key to understanding what to fundamentally invest in after the banks, mortgage lenders and insurers put us in a tailspin?  The key was understanding what technology had begun... the financial crisis could not stop.

The past few years uncovered some of the most irresponsible Wall Street habits we have witnessed in our lifetime.   Whether that was turning a quick buck by selling the mortgages of anyone who had fogged a mirror, or leveraging up banks to levels that nearly caused a financial catastrophe when the mortgage game came to an end, the individual investor and the market as a whole had to endure the fallout.

Since the Lehman Brothers failure and the follow on decline in the market, many investors soured on the stock market.  And because of that many missed the big market rebound that has the DOW at all time highs just a few years later.

Our subscribers knew exactly what to focus on in technology...the enormous technology shift to digital mobile media.  This shift turned stalwart companies into has-bens and turned an upstart in a major sector into a dominant player.  Only seeing through the fog of the Wall Street turmoil and focusing on fundamentals of technology investing allowed our subscribers to outperform with the #2 overall investment portfolio as tracked by the Hulbert Financial Digest. 
 

3 Maxims

Here are 3 of our maxims we would urge investors to adopt as part of their thinking going forward.

• Invest in companies instead of "the market"
• Understand why there is always raging growth in the right technology companies.
• Understand why the right technology companies outperform the market as a whole no matter what "the market" does.

As the editor of currinTechnology  I have applied these maxims.  In my first year guiding the investment selections we delivered subscribers a gain over 150% in one year!  As proud as I am of that initial performance, as highlighted above, I am even more delighted in what the research team was able to uncover and deliver for subscribers in the recent turbulent markets.

Our Flagship Portfolios

The flagship portfolios A and B have been a beacon of investment success for long term investors.  We are proud to have delivered performance to subscribers despite the market meltdown brought on by the financial crisis.   

currinTechnology Flagship Portfolio A and B Performance

source: independent audit of investment newsletter portfolio performance 10/2002 to 2/2011, The Hulbert Financial Digest

As we further away from the years marred by the financial crisis we will continue to bring the research and editorial team talent delivering this outstanding, independently audited, performance to you.  What many of our subscribers can attest to is that you can expect to receive a high level of research for a reasonable price. Better still is the fact that you will be introduced to tech stocks that deliver that market- beating performance.

Everything is relative.  So instead of showing the performance of these portfolios versus the market let's show the recent performance relative to our peers in the investment newsletter business.

The Hulbert Financial Digest tracks the performance of about 650 investment newsletter portfolios.  According to the independent audit of the Hulbert Financial Digest (to November 2010), the portfolios above are all in the upper ranges of what you can find.    

(note the Nanotech, Growth and Dominance, and  Super Growth Horizon portfolios are available to you via the free companion subscription you receive to Rick's Research, a newsletter product with the same research and editorial team)

Let's look closer at our 3 tech maxims.  They are actually very easy to understand and explain much of the outperformance of these portfolios.

Invest in companies vs. investing "in the market".

There is a technology company today that in 5 years will be worth 5 to 10 times more than it is today.  You know it's true even if you don't know what the company is named.  If you think you can do better investing in a broad index like the S&P than you can do by making this company a portion of your portfolio you are likely mistaken.  The better news is that there is not one company like this, there are several.  Having you understand why these selected companies will experience such growth is why we are here. 

While the road to this high return will be less bumpy if "the market" is generally good, the market will not change the fate of these companies.  They have found something their customers and competitors crave.  Along the way to these gains the market will provide its vote on the value of the overall market, the value of the individual company, the value of the technology sector, and every job, inflation and housing report along the way.  At the end of a few years these companies will simply deliver such a pile of cash on the balance sheet with continued growth ahead that the value of the stocks will speak for themselves.  As Warren Buffet likes to say (and subscribers have heard us repeat)

"In the short run, the market is a voting machine but in the long run it is a weighing machine."

Think of investing in companies vs. the market this way.  Which company in a few years will be throwing off so much cash as to be a "weighing machine no-brainer"? Buy it now and you will care little what "the market" does.  

Understand why there is always raging growth in the right technology companies.

We like to think about technology companies versus other companies available as investments.  Think about companies that sell laundry chlorine, paper towels, diapers, breakfast cereal, soft drinks, financial services or insurance.  There are fine investments in all these areas that offer dividends.  Technology companies typically offer no dividend or a very small one.  Their mantra is growth. 

Warren Buffet loves steady companies like this because he understands them.  But when you look at the growth in these companies you are looking at growth though global market share gain, shelf space gains, gradual product improvements, and general execution by management. 

In technology, you get a very different set of disruptive growth dynamics.  These companies are making products and services more innovative.  They create change.  That change is accompanied by dramatic upside potential. 

A short series of words describing what technology brings is advancement, revolution, evolution, accuracy, disruption, productivity, speed, compactness, and efficiency.  These attributes are desirable to every one of the steady companies in other areas of focus.  In fact, the steady companies adopt technology to achieve these technology attributes in their businesses.  Better, cheaper and faster has no limitation to PCs, electronics, and smartphones.

What's more, technology has a severe element of Darwinism built in.  There is always one technology about to replace another.  Similarly there is always some new technology a market leader needs to adopt to remain king of the hill.  If his competitor gets the technology for example he may lose his position. 

All of these characteristics of technology add up to one reality.  There is always raging growth in the right technology companies.   Innovate or die is the way to think of it.  While that may be somewhat applicable to laundry chlorine, paper towels, diapers, breakfast cereal, soft drinks, financial services and insurance; in technology it's essential.

Finding the right companies to deliver this growth and sharing that with you is what we do.  Whether it's in the pure areas you may think of as technology like chips and computing or in areas as diverse as gaming, advertising or media, our goal is to deliver big profits to you with our technology stock investment ideas. 

Understand why the right technology companies outperform the market as a whole no matter what "the market" does.

Understanding why the right technology companies will thrive in a good or bad market is perhaps as simple as understanding the weighing machine.  Still, there are 3 additional reasons why the right technology companies will thrive regardless of what the overall market is doing.

• 1. Technology transitions don't care much about economic cycles.
• 2. In an up or down economy, productivity enabled by technology is key and even transformative.
• 3. Innovation drives technology winners.

Let's briefly examine each of these reasons.  

1. Technology transitions don't care much about the economic cycles.

Consider a change from VCR technology to DVD technology.  Did it really matter that in the middle of such a transition if the economy was weak or strong?  Technology transitions don't wait for a good economy.  Similarly, once digital storage began replacing film a new data storage medium began thriving.  Whether the economy was good or bad, the technology that began flourishing in cameras was destined for Apple iPods, iPhones, tablets and Macs.

2.  In an up or down economy- productivity enabled by technology is key and even transformative.

Information technology (IT) has been a driving force of the U.S. economy for a few decades now.  While the rapid gains in productivity are giving way to a saturation of IT in large companies, the small business engine remains a growth vehicle for the huge productivity gains enabled by IT.  More importantly perhaps in the wake of a terrible economic downturn are the witnessed effects of resiliency imparted by information technology.  Business cycles simply have less impact on a firm's productivity than ever before because of the impact of IT on operations and management efficiency. 

Even in the midst of the latest economic downturn, productivity began rising sharply in the U.S.  While it's tempting to point to deep cuts in payroll as the cause, it does not necessary follow that a company can get more productivity (output/work hour) with fewer employees.  In fact, the opposite was generally true before IT became pervasive.  What this means in lay terms is the following:  In a downturn a company can lay off the least productive and further empower the most productive.  The productivity of the remaining workforce is even increased with more pervasive use of mobile IT.  It's no wonder that the acceleration of smartphones and mobile social media occurred during a recession.  It's not just consumers that love their snazzy net enabled phones, it's also businesses that realize the power of connecting to employees and consumers wherever they are whenever they need to.

The next great wave of IT is already occurring in emerging markets.  Internet based computing will lead to a certain level of commoditization of IT globally.  Over time this will lead to an equalization of capabilities in less developed areas of the world.  While the commoditization of IT may sound like a potential negative for IT, we believe the reverse is true for the right technology companies.  The globalization of IT will lead to an unleashing of the private sector economies of not just India, China and Brazil; but to places such as Africa and Central America as well.     

3.  Innovation drives technology winners

The internet has been such an amazing cauldron of innovation.  Gone are the fly by night dot com bubble era companies relying on hot money to finance a terrible idea.  Today you have companies like Facebook, Google, Twitter and Netflix that really deliver on the promise of the internet.  

Now we enter a new frontier.  From here on we are in an age where billions of consumers are always connected all over the globe.  This unprecedented event in history will lead to unprecedented innovation and changes in global commerce.  We have no doubt that it will be technology innovators that work to ease friction and enable an era of global and mobile consumer activity.  And guess what... that's great news for companies that sell laundry chlorine, paper towels, diapers, breakfast cereal, soft drinks, financial services and insurance.

Welcome

We welcome you to join us in our quest to deliver big profits in technology stocks.  The true golden age of technology is yet to arrive.

Rick Currin

editor, currinTechnology

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