Looking for a Better Investment? Why You Should Consider the Enterprise Software Sector

Implications: 1. In percentage terms this is not biggest loss in my memory much less history 2. Enterprise Software behaves differently than most markets 3. Enterprise Software tends to follows its own cycle and lag behind the economic so short term there are still some good days ahead for the investors in this sector.

Analysis: On October 19, 1987 I was working for Cullinet - the first software company to be traded on the NYSE   - the day the Dow went down 22.61%! We were on our way to close some business at Atena and all along the drive to Hartford we listened on the radio as the average dropped 50 points, 100 points, 250 points. We were horrified and feared for our jobs.

The next day the Dow dropped another 9%. So when the dust settled on a percentage basis the loss was 4.5 times as big as Tuesday's.   But Enterprise Software works a little differently than most things and ultimately we were surprised by the turn of events. 

For one thing the downturn helped Cullinet because most IT projects are justified on the basis of cutting expenses. Many companies thought they could drive cost out of thier business and maintian marigns so they continued to spend on IT even when they were laying off people.

Thanks to that experience and the almost daily exposure my current job gives me to CIO’s I am confident a savvy investor can make money in this segment.