I want to let you in on a secret.

It’s the greatest untold story in the stock market today.

The mainstream media ought to be covering this story aggressively – yet I’ve hardly heard a word about it.

[ad#Google Adsense 336×280-IA]Perhaps it’s because the facts I’m about to share with you contradict the impending “tech bubble” the financial media has been gleefully speculating about for the last year or so.

However, here’s the real story: The valuations of tech stocks are still grounded in reason – and tech stocks as a group absolutely crushed the overall market in this year’s first quarter.

So, today I’ll show you precisely how high tech is flattening everything in its path.

And then we’ll talk about ways to make some money while everyone else is distracted by “bubble talk”…

Knockout Punch

During the first quarter, the tech-centric Nasdaq Composite Index beat the bellwether Dow Jones Industrial Average by 656%.

No doubt some of you may say comparing the Nasdaq to the Dow is not a fair fight. And that’s partially true.

The Dow contains just 30 of the nation’s mega-cap stocks, including new entrant Apple Inc. (Nasdaq: AAPL).

With Apple as a key exception, it mostly holds stocks that people count on for their stability, not rapid price appreciation.

For its part, the Nasdaq is much more a growth story. It’s brimming with younger, more aggressive firms in growth fields like biotech, the mobile revolution, cloud computing, Big Data, and the connected car.

However, even if we ignore the Dow, tech is still the biggest driving force in stocks today – the Nasdaq in the first quarter beat the S&P 500 by 268%.

In the first quarter, the Nasdaq gained 4.16%. That compares with first-quarter profits of 1.13% for the S&P and a mere 0.55% for the Dow.

True, it’s always possible that tech just got lucky and had a strong first quarter.

Except that the empirical data conclusively proves just what I’ve been saying ever since I launched this service two years ago.

That’s when I said that tech stocks will almost always beat the overall market – and I just reiterated that when I created “The Million-Dollar Tech Portfolio.”

Just look at the data when I compare the Nasdaq Composite with the S&P:

  • Over the past year, the Nasdaq wins by 62%, with 15.3% profits compared to the S&P’s 9.4%.
  • Over the past two years, the Nasdaq wins by 57%, with 51.8% profits compared to the S&P’s 33%.
  • And over the past five years, the Nasdaq wins by 35% with 99% profits compared to the S&P’s 73%.

Two Things

Since the early stages of the bull market, tech stocks are the clear winners. And – this is vitally important – the amount of the win has steadily increased.

That’s due to two key factors.

  • In the early stages of the market, stocks as a group went on a tear, living up to the old adage that a rising tide lifts all boats.
  • We have now passed what I call the Tech Tipping Point.

Here’s what that means.

As a society, we literally cannot get by – hour by hour – without all kinds of advanced tech.

People depend on smartphones, tablets, social networks, e-commerce, video streaming, and the tech-laden connected car.

Businesses must have mobile workers, cloud computing, smart data analytics, robotics, cybersecurity, sensors, software, and much more to survive and compete.

And we’ve just barely scratched the surface of tech’s impact on the global economy.

Consider what’s happening with the mobile revolution. The iPhone, launched less than a decade ago in June 2007, was essentially the world’s first smartphone.

These days, tech companies are selling more than 1.2 billion smartphones a year, according to figures compiled by Gartner. And when you look at the broader market for all mobile phones, the numbers are even more impressive.

According to the United Nations, more people today have access to cellphones than they do indoor toilets. The UN says about 6 billion of the world’s 7 billion people have cellphones, while only 4.5 billion have working toilets.

Ad Money

And the impact of mobile devices is broader than it seems. Five years ago mobile advertising barely existed.

Now, a new report by the researchers at eMarketer says mobile advertising is poised to become the dominant form of digital advertising. That means it faces enormous growth for this year and the next.

Globally, advertisers will spend $101.37 billion for placements on mobile phones and tablets in 2016. With 2013 as the base year, the mobile ad market will have expanded almost 430% through the end of next year, eMarketer said.

As important as the mobile revolution is, it’s not the only field that will experience big growth this year.

For example, both consumers and businesses will shift more of their operations to Web-based remote data centers in a field known as cloud computing.

A recent study by Goldman Sachs (NYSE: GS) projects the market for software as a service – in which software is licensed on a subscription basis and hosted on the cloud – will hit $106 billion next year. That’s a 21% increase from 2014′s estimated sales of roughly $88 billion.

Meanwhile, forecasters at ABI Research are estimating the number of devices connected through the Internet of Everything (IoE) will grow by roughly 28%.

ABI didn’t specify what the market is worth but said that by the end of this year the world will see some 1.5 billion interconnected devices covering everything from smart electric meters to medical devices.

By the year 2020, the number will rise to 5.4 billion, which amounts to 260% growth in just five years.

As you might expect, we’re seeing continued strong demand for a key enabling technology used through the global tech ecosystem – semiconductors.

They’re used in everything from smartphones and tablets to data centers and high-performance computers to autos and HDTVs.

The industry trade group SEMI predicts that sales of equipment used to make chips will grow by 15.2% this year to $43.7 billion. That would represent a 37% increase in sales of chip-making gear since 2013 – and it’s the sector that our recent FormFactor Inc. (Nasdaq: FORM) recommendation lives in.

This is a great snapshot report because it shows us that chipmakers remain optimistic about growing tech demand overall. That’s why they are spending so heavily on machines to make semiconductors.

Thus, I believe all the elements are in place for tech stocks to continue beating the overall market for the rest of 2015 and in the foreseeable future.

And you know what that means.

If you want to beat the broad market’s mediocre returns of late, you simply must be investing in technology.

— Michael Robinson

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Source: Money Morning