The Technology Stock Advisor Newsletter
Published by Investment Management & Insurance Advisors, Inc., of Raleigh, N. C.
Professional Portfolio Management With A Patented Technology Stock Selection Methodology
Understanding Why Technology Stocks Are Essential
Understanding Professional Portfolio Management
Our Services and Products
Find Your Tech Stock Risk Comfort Level
Who We Are
Technology Stock Investments
please wait...loading
Investment Advice
Our ADV Disclosure Document
Find Your Investment Sleep-Well Risk Number
TSA Asset Allocation Advice
Retain IM&IA to Manage Your Investments
TSA Fixed Income Advice
SHOPPING MALL
please wait...loading
The Relationship Between Technology and Stock Prices
Looking For Stock Investment Opportunities In The 9 High Technology Value Chains
We define 9 high tech value chains, where we believe most of America’s innovation occurs in sustaining product innovations and radical technology crossover between industrial sectors.
We use the analysis of Dr. Ed Feser, of the University of Illinois, to define the nine value chains, also sometimes called industrial clusters. Feser’s most recent work is titled, Benchmark Value Chain Industry Clusters For Applied Regional Research, (October 2005, Department of Urban and Regional Planning & Regional Economics Applications Laboratory(REAL), University of Illinois).
The nine value chain main categories are:
1. Chemicals
2. Precision Instruments
3. Engine Equipment
4. Computer and Electronic Equipment
5. Information Services
6. Pharmaceuticals
7. Fertilizer and Chemical Products
8. Industrial Machinery and Distribution Equipment
9. Aerospace
Each main category of a value chain has members from different industrial sectors who trade with each other in producing a final finished good or product. Sometimes this activity is called a “supply chain, or a value chain.”
In the Feser methodology of deriving the value chains, each value chain consists of industry i, for example firms in Petro Chemicals are trading partners with firms in the 13 other industrial sectors who make up the Chemicals Value Chain. Firms from the Petro Chemical sector buy supplies from its suppliers (upstream firms) and sells to firms who are customers in (downstream) industries. For example, Petro Chemicals sells products to Plastic Materials & Resins.
In principle, there is a distinct value chain for each main value chain category. For example, the Chemicals Value Chain can be identified by the 13 members who trade with each other.
In practice, the Feser method applies statistical factor analysis on coefficients in a national input output table to identify a reduced number of value chains that are, in essence, groups of industries with highly similar—and therefore linked—chains. The great value of the Feser method is that it describes both the production technology of how a good is made, and also identifies the market of buyers for that good, as it winds its way to becoming a finished good, in the final demand marketplace.
In the Feser method, any given value chain category would be comprised of members from industrial sectors whose trading relationships and linkages with one another are stronger than their linkages with sectors outside the group.
In the New Technology Markets Newsletter, we start with the nine high technology value chains, and apply the insights from a theory of technological evolution, called Structural Evolutionary Regional Economic Theory (SERET) , to come up with ideas and insights for investment opportunities in future markets.
You can read more about SERET in our book, Predicting Technology, (2007). You can also visit another website where we describe more about the implications of technological evolution.
The Nine High Technology Value Chains and Individual Industrial Sector Members
Title of Input Output Industrial Sector Members
Value Chain Classification
1. Chemicals
325110 Petro Chemical Mfg.
325211 Plastic Materials & Resins Mfg.
325190 Basic Organic Chemical Mfg.
325212 Synthetic Rubber Mfg.
325222 Organic Fiber Mfg.
325520 Adhesive Mfg.
325613 Surface Active Agents Mfg.
325221 Cellulosic Organic Fiber Mfg.
325998 Misc. Chemical Products Mfg.
325991 Custom Compounding Resins
325320 Pesticides/Agric. Chemical Mfg.
325311 Nitrogenous Fertilizer Mfg.
325910 Printing Ink Mfg.
2. Precision Instruments
334513 Industrial Process Variable Instruments
33451A Watches Clocks, Measuring and Control Instruments
334516 Analytical Lab Instruments
334512 Automatic Environmental Control Instruments
333314 Optical Instruments and Lens Mfg.
334514 Fluid Meters and Counting Devices
335314 Relay and Industrial Control Mfg.
334515 Electricity and Signal Testing Instruments
3. Engine Equipment
33396 Fluid Power Pump and Motor Mfg.
33361A Speed Changers/Mechanical Power Transmission Mfg
333911 Pump & Pumping Equip Mfg.
333912 Air & Gas Compressor Mfg.
333618 Other Eng. Equipment Mfg.
332910 Metal Valve Mfg.
333995 Fluid Power Cylinder and Actuator Mfg.
333995 Measuring & Dispensing Pump Mfg.
333611 Turbine & Turbine Generator Mfg.
332994 Small Arms Mfg.
33399A Scales, Balances, Miscl. Machinery
333991 Power Driven Hand Tool Mfg.
335312 Motor & Generator Mfg.
336300 Motor Vehcile Parts Mfg.
333992 Welding & Soldering Equipment Mfg.
336992 Military Armored Vehicles Mfg.
5. Information Services
514200 Data Processing Services
54151A Other Computer Related Services
541512 Computer System Design Services
511200 Software Publishers
541511 Custom Computer Programming Services
514100 Information Services
513300 Telecommunications
513200 Cable Networks and Distribution
6. Pharmaceuticals
325612 Polish and Sanitation Goods Mfg.
325620 Toilet Preparation Mfg
325611 Soap and Detergent Mfg.
325400 Pharmaceutical and Medicine Mfg.
325320 Pesticides and Ag Chemical Mfg.
