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    A Perspec tive On Financial Topics For Our Investors

Issue No. 111 Spring 2011

A New Era of Internet Investing

Not since the Internet craze of the late ’90s have technology investors shown the ardor generated by the latest wave of social media, e-commerce, and other digital companies blooming on the increasingly ubiquitous Internet.

InsIde ThIs Issue

5Performance Spotlight: Emerging Europe: Standout Returns But Often Overlooked

6Can Mid-Cap Stocks Sustain Their Outperformance?

8U.S. Industrials Stage a Strong Comeback

10 Perspectives: Inflation Outlook Moderate Despite Spike in Energy Prices

12Investment Viewpoint: A More Challenging Year for Fixed Income Investing

14Municipal Bonds: In-Depth Credit Research Is Critical

16Personal Finance: Delaying Retirement But Not Your Retirement Dreams

18Taking Stock of the Market: Are We There Yet?

19Performance Update

  • Equity Market Review

  • Fixed Income Market Review

  • Fund Performance Tables

Sparked by the introduction of Apple’s iPhone four years ago, the convergence of computing and communications—enabling wireless Internet access virtually anytime, anywhere—is not only changing lifestyles and spawning dynamic new companies, but also providing new growth opportunities for estab- lished industry leaders.

This Internet boom is different than that of the latter 1990s, when many companies with no earnings or prospect of earnings went public at stratospheric valuations and their businesses proved unsustainable.

Unlike that dot-com bubble, which burst in March 2000, these new trendsetters generally have far more viable business models, and some have grown rapidly. They are capitalizing on the growing capacity of wireless networks to support expanding mobile communications— trends that have enabled a new era of innovation.

Though still private companies, the upstarts are attracting lots of attention

and investor interest. They include social media rms (Facebook, Twitter, and LinkedIn) that are fostering huge Internet communities, location-based e-commerce companies (Groupon and Living Social) that bring local

businesses and consumers together online, such social gaming developers as Zynga, and online consumer refer- ral companies like Angie’s List.

In contrast to the last Internet boom, “the protability or potential for protability is already there,” says David Eiswert, manager of the Global Technology Fund. “It’s not like they are burning cash. They have scaled their revenue and they were able to keep growing despite the massive global recession.

“Also, the rst Internet bubble was a lot about conceptualizing connectivity—what it would be like to have a phone in your pocket that gives you Internet access from anywhere,” Mr. Eiswert says. “We got that in 2007 with the iPhone. Now, there are 3G [third genera- tion] networks all around the world. So the infrastructure has caught up with the business models.”

Ken Allen, manager of the Science & Technology Fund, adds that the rapid ascent of Facebook and Twitter simply would not have

been possible with just desktop computers and laptops. “The value of such social media rms is tremendously enhanced when people can access them from anywhere on portable computing devices, which

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