Fred Hickey: Tech Strategist

Fred Hickey has been publishing High-Tech Strategist, a monthly investment letter, since 1987. In the latest issue, dated February 5, he takes aim at the Fed’s massive injections of money into the economy, most recently through its QE2 program. While the policy has led to a soaring stock market, Hickey believes it hasn’t helped either the housing market or job creation. Instead, he argues, it has led to tremendous commodity inflation, which he compares to the tech, housing, and credit bubbles of the not-so-distant past.
 
Hickey, who views himself as a value investor specializing in technology, says that as long as the Fed can continue to print money, there’s no ceiling in sight to the stock market’s surge—but that at some point it’s certain to end badly. Meanwhile, he says, he is watching “in terror” as “money-losing Chinese Internet companies” come public “in droves” in the U.S., skyrocketing in price within minutes.
 
Taking shots not just at the Fed but at CNBC, numerous unnamed analysts, the Obama administration, and others, Hickey says that individual investors are being “suckered back” into the market in large numbers, many of them into overpriced tech issues. Most tech shares today, he says, are priced for “perfection,” making steep losses likely when the day of reckoning comes.
 
For all that, Hickey acknowledges that for many tech companies, fourth-quarter results were strong, including those for IBM, EMC, and Lexmark. He also is particularly partial here to Microsoft, which reported “blow-out” results on the back of huge growth in business PC spending. While he has been reducing his long positions in most tech stocks, he is continuing to hold onto Microsoft because it remains dirt cheap.
 
His largest positions today remain in precious metals, primarily in gold but also in silver and platinum, and he expects gold will soon resume rising. He attributes the monster bull market in gold to the Fed’s debasing of the U.S. dollar and notes that investors in China, India, Russia, and elsewhere are hoarding gold in reaction to the Fed’s policies.