INTERNET TRENDS: Meeker presents at All Things Digital Conference May 30-2012

I have gone through all 112 slides of Ms. Meeker’s presentation and selected 10 that seemed to be the most important.  The pdf file, Meeker INTERNET TRENDS May 2012 – Selected Charts JBTSR, incorporates those slides and my comments.  I encourage you to read my edited slide collection.  If you have time, the link to the entire slide deck is included on my file.  You can have no doubts about our conviction in the investment outlook for our portfolio companies engaged in WiFi, wireless video technology & services and associated mobile advertising related businesses.

The following is one of her summary slides that I believe captures the essence of the presentation. 

Aberdeen Investment Management – a guide service for micro-cap technology investment

Rising home prices and declining supply of homes for sale = more “wind at our back” – the housing “drag” is morphing into a housing “push” for the economy

Multiple measures of home prices are showing firming instead of weakening.  The following chart from Capital Economics displays pricing change vs. months’ supply of homes for sale which is now the lowest since 2006-2007.  We are finding ways to expose our portfolio to the adoption of SaaS technology solutions to the complex needs for the residential real estate life cycle.  Jeb Terry, Sr. May 26, 2012

Aberdeen Investment Management – a guide service for micro-cap technology investment

When everyone is worried about a crash – Don’t be

Birinyi Assoc. reviewed the effectiveness of the Yale School of Management “Crash Confidence” Index measuring the percentage of institutions that saw less than a 10% chance of a market crash in the next 6 months.  Fortunately, Birinyi’s findings are that the indicator is a pretty decent contrary indicator. 

The S&P 500 has on average been down only 6.1% at the lowest point during the 6 months following a spike in fear ( a sharp drop in the crash confidence line on the following chart).  The only point where the signal might be considered accurate was following the Oct 2001 drop in confidence.  The S&P 500 was up 6 months later but went on to drop 29% in the following 6 months.    Jeb Terry, Sr. May 25, 2012

Aberdeen Investment Management – a guide service for micro-cap technology investment

Credit demand is beginning to recover. Rising loan demand is strongest in over 10 years.

Credit demand is critical to economic expansion and is the best expression of consumer and business confidence and credit demand is rising for consumer, mortgage and business loans.  The percentage of banks reporting increasing loan demand is the strongest in over 10 years.  These charts are courtesy of Capital EconomicsJeb Terry, Sr. May 6, 2012

Aberdeen Investment Management – a guide service for micro-cap technology investment

M1 still rising, cash hoarding inconsistent with a market or economic top.

My update of monetary aggregates shows money is still flowing into insured checking accounts at an elevated rate.  M1 has grown by 18.7% in the last 12 months.  The average 12 month growth rate since 1970 is 5.4%!  Consider M1 as the raw material for bank loans and consumer spending.  High M1 growth is consistent with economic recovery periods coming out of troughs.  Low or negative M1 growth is consistent with economic tops.  We have now seen 16 consecutive months of double digit percentage LTM M1 growth – the longest period since the economic recovery of the early 90’s where there was 24 months of double digit growth.  M1 is ~15% of nominal GDP.  In a full recovery and nearing a cyclical top it would be 10% or less.  M1 is the lubricant for the economy that can be multiplied in the form of bank loans once confidence recovers – which is showing signs of improvement.   Jeb Terry, Sr. May 6, 2012

Aberdeen Investment Management – a guide service for micro-cap technology investment

No worries over the ISM surveys for April – Manufacturing squiggled up, Non-manufacturing squiggled down – situation normal, no obvious trend change.

The ISM surveys still indicate an expanding economy.  A score above 50 means business expansion.  A score below means contraction.  These are surveys, not hard production data and hence can be bumpy.  My take is the economy is still sorting through the lagged tightening impact of the panic into cash in Q3 last year.  Jeb Terry, Sr. May 6, 2012

Aberdeen Investment Management – a guide service for micro-cap technology investment