By coinnews 
00:00 Speaker A
Where is the largest strength within technology in what is an uncertain environment that we’ve heard about from multiple CEOs of the course of this earning season?
00:13 Speaker B
Well, uh, clearly the strength is um, it’s very dependent on the exact time frame that you’re looking at it um over. Uh, over the last couple of years we’ve seen some significant strength across most um of that uh, of the of the entire ecosystem. And as we think about just over these last couple of months here, as we get the tariff, um headwinds, uh, as we get more of the global trade mess, um, that is going on, you’re seeing more strength in uh, in areas that are less impacted by that specifically and that would tend to be areas like software. Software being relatively safer uh, from an impact on global trade since they are primarily a digital delivery, uh, cloud delivery type of idea uh, as opposed to needing to manufacture their goods. Um, and so hardware companies that are manufacturing more significantly overseas tend to be more exposed uh, to, uh, to tariffs, uh, and and some of the current geopolitical issues that we’re facing today. Uh, the flip side to that though is quite frankly that, uh, the software companies because of their business model tend to trade at a much higher premium. Um, and so when there is a flight to safety in the markets, uh, like we’ve seen over over much of the course of the last two or three months, you still see a down draft in many of the software names simply because they were trading at a high valuation multiple. Um, as you get some questions about global growth, uh, that impacts corporate belt tightening perhaps and potential spend uh, on on software and so there are different factors that are playing in uh, to to the down draft that we’re seeing in in different parts of tech, but clearly software would be kind of classically viewed as the as the safer from a global trade perspective in this current market environment.
03:21 Speaker A
Okay. So that considered, what is a healthy portfolio allocation to these different components within the technology sector, the different industries that sit underneath of that?
03:44 Speaker B
Yeah. So, I uh, again, I think it depends a little bit on what your goal for a portfolio is. Um, in ours, in our fund, which is a classic trend following momentum oriented strategy, we actually have exposure to multiple, to really all of those types of, of technology. So we’ve had an overweight for the last couple years in that hardware area which, again, over a medium term perspective has continued to be, uh, a great place to be um, in in the overall markets. Um, and we still think that there’s plenty of opportunity in that space. And and understanding that that that area of hardware is not monolithic even in its in its own case. So you have a company like Flex, uh, which manufactures a tremendous amounts of their electronic components overseas and is far more exposed to the global trade war, uh, sorts of issues relative to, uh, another holding of ours, a company like Motorola solutions. So Motorola, uh, clearly has some foreign uh, manufacturing. They’ve moved largely away from China, but their end user, their end user and buyer tends to be government entities and police forces, um, that are using their two-way radios, um, etc. Those tend to be critical infrastructure, uh, types of ideas which, uh, uh, you know, the the potential to pass through costs is much more significant there uh, and so you’re seeing a a very different sort of action um, in even different types um, of hardware stocks. But then we also have significant exposure within the software space to companies like CrowdStrike, um, which again are in a sweet spot from a secular growth perspective and are not, uh, tremendously impacted by uh, by the current issues that are that are plaguing the the geopolitics, um, area of the world. You think about semiconductors,
07:01 Speaker A
Mhm.
07:01 Speaker B
Clearly semiconductors are in the sweet spot of, or maybe, maybe the opposite of that from a global trade perspective, very sensitive to global trade concerns.
07:22 Speaker A
Yeah.
07:23 Speaker B
But semiconductors are also perhaps as strategic and a secular of an idea as you can think of from a from economic growth over the next decade perspective. So having some exposure there continues to be important.