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How College Student Sentiment Can Predict Equity Performance (Part 1)

|Includes:Netflix, Inc. (NFLX), SFLY
Introduction

In the last two to three years, we have see an extremely rapid change of how people are using technology in the course of their daily lives. It is something that is hard to ignore, and it must be noted that many of these technology changes had long been identified by America's youth long before the older generation, as well as the respective stock prices of these companies, had caught on. Of the many disadvantages that young investors experience, (inexperience, lack of technical knowledge, etc.), here lies one major advantage for us young investors today. We are in the "tech trenches" so to speak, and the stocks of many of these companies whose products we use on a daily basis have since blown up long after we knew about them. In the next couple of my blog posts, I will outline a few companies that have successfully made the transition from transforming their exposure from the tech-savvy youth to the laggard, deep-pocketed masses, as well as many companies that are on the brink of doing so. This transformation, along with a slew of other factors, is what has led to the huge run made by numerous stocks in the tech sector in the last fiscal year. A look at many of 2010’s Cinderella companies were identified by the youthful masses long before the explosion of their respective stock prices. HTC Corp? Up 140% YTD (on the TPE exchange). Netflix? 240% YTD. One of my personal favorites, Shutterfly is up 126% from a year ago. All three of these companies were relatively common names to your average 20 year old in 2009; meanwhile it took Wall Street much longer to understand why these companies were undervalued and their growth underestimated. While the ship has set sail on many of these companies, there are numerous companies that still have yet to take off and remain under the radar. Opportunity awaits us in both the domestic and emerging markets next year. I believe tech will continue it’s run into 2011, as earnings from many of these companies will continue to baffle analysts. The question is, will you be the one buying into these winners at the bottom, or following the crowd at the top a year later? Over the next couple of posts I will be commenting on a number of companies that I believe will be affected by a catalyst I can only describe as "positive youth sentiment", something that I believe helped ignite solid price growth in a number of companies (including the three mentioned in this introduction) in 2010.
Stocks: NFLX, SFLY