Internet Stocks To Lead NASDAQ To New Highs In 2015

The internet stocks are showing relative price strength after a year of price consolidation and will likely lead the NASDAQ to new highs in 2015.  The largest companies by market cap in the Dow Jones Internet Composite index are listed above.  Notice that Facebook (FB) and Google (GOOGL & GOOG) make up approximately 20% of the index alone.  Google has been moving sideways for the majority of 2014 and I think is modestly valued relative to other technology companies.  FDN is the largest ETF that tracks this index.

Akamai breaks out. Tech leadership expands.

What began as market leadership in biotechnology stocks quickly spread to internet stocks and is now perpetuating in the NASDAQ 100 mega cap stocks.  We are entering a period of broad based tech market leadership which may continue for the duration of this bull market that began in 2009.  It is important to note that both the biotechnology and the internet index has doubled in a 2 year time frame.

The Exponential Nature Of The Stock Market

In his book The Singularity Is Near, Ray Kurzweil eloquently summarizes some extremely interesting phenomena about the evolution of technology and how it fits with grand scale evolution.  I have read this book twice and am fascinated with the concepts contained in it and their prospective application to the financial markets.

He suggests that an exponential trend will cross "the knee of the curve" before it becomes recognizable to the average observer.  If you consider the fact that the underlying trend in the Dow Jones Industrial Average is exponential in nature, I would place the knee of the curve somewhere during the first third of the 20th century.  In other words, we're well past it and the trend will continue much higher in an accelerating fashion.

Facebook Up 17% After Hours, LinkedIn Trend Is Up, FDN Is The Best Way To Play Them Both

Facebook finally posted earnings results that beat estimates and will be rewarded by the market tomorrow.  However, its social networking cousin, LinkedIn, seems to be the better play.

Despite the fact LinkedIn is a fraction of Facebook's size,  it has far more predictable earnings and revenue growth data and is likely to continue its smooth growth in the future as it continues to implement more revenue generating service offerings to its members.

It is extremely hard to determine the likelihood of success of a given social network or high P/E multiple internet company.  FDN is an ETF that tracks the Dow Jones Internet Composite Index. Although it has a more modest MER of 0.60%, it is worth every penny over the long term.