Here comes the Industrial Internet – the combination of networks and machines

Many of you know that we at Aberdeen have been following and investing in the machine to machine concept (“M2M”) of the “internet of things” for many years.  GE recently published an informative report that attempts to add metrics to many of the concepts embodied in the grand notion of an always on, always connected fabric of people and machines.  The intersection of Moore’s Law and Metcalfe’s Law is enabling cloud computing models that were barely imaginable only a few years ago.  All of us will become connected participants and beneficiaries of these developments.  The opportunities for investing may increasingly resemble the late 1990’s if the patterns of adoption and productivity gains described in the report play out according to the authors’ model.  I have posted a copy of the report published in November on our “Brain Food” tab (here).  I have also included below a key graphic from the report and a link to the GE blog that summarizes the findings (here).  Jeb B Terry, Sr. Feb. 189, 2013

Industril Internet GE 11-26-13 

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PE Ratios lower now than at prior market tops

A recent article on Barron’s (here) posited that the market is “too cheap to pull back“.  They anchored their statement on a report by Jeff Kleintop at LPL Financial who did us a favor by producing the chart that follows below displaying the fact that the PE Ratio for the S&P 500 has been much higher at previous market tops since WWII.  The peak PE ratios have been near 17X or above vs. the current level of 14.5X trailing 12 month earnings.  Of course now may be different but Mr. Kleintop points out a significant market top now would be bucking a long historical tide.  I am rooting for Mr. Kleintop.  Jeb B. Terry, Sr. Feb. 12, 2013

Kleintop LPL Bull Mkt top valuations 2-4-13

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What follows strong January performance? More of same.

Lazlo Birinyi reported last week (Ticker Sense) that the S&P 500 performance for January was the best since 1997. He went on to say . . . “historically a strong January has led to a continued rally into the end of the year. On average, the market has gained 12.7% from February until the end of the year. The one instance where the market traded lower was 1987.”  Sounds good to me.  Jeb B. Terry, Sr. Feb. 11, 2013

Birinyi Jan Perf hist table 2-4-13Capture

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