Paul Moore is a new tech investing expert with The Smart Profits Report. He says the best way to beat the bear is to follow the money. In a bear market cash is king. It allows companies a number of options that support their share price…

When you’ve got a market hurricane wreaking havoc with investors’ portfolios, cash is the air in the life raft that keeps stock prices afloat.

As a technology sector specialist, I can tell you that this is a particularly good sector to focus on when you’re looking for profitable ideas in a volatile market. This is simply because the group contains companies that offer better than average free cash-flow growth.

And in a bear market, cash truly is king. Even if the market is flagging, a company that boasts a strong cash position has a number of options available that can support its share price. This includes:

• Tactical acquisitions that sustain earnings growth. A good example here is Oracle (Nasdaq: ORCL).
• Share buyback plans that squeeze out short-selling interest - like we’ve seen with eBay (Nasdaq: EBAY).
• Cash distributions, as in the case of Microsoft (Nasdaq: MSFT).

The common denominator that these three companies share is that they all provide infrastructure that supports their customers’ businesses.

And in a bearish environment, this is crucial, as it gives them the option to raise prices in order to offset the impact from tougher selling conditions where fewer units are sold.

This kind of flexibility is evident in the performance of the Powershares QQQ (Nasdaq: QQQQ) - the ETF that tracks the Nasdaq 100 index. It’s outperformed the S&P 500 by 26% so far in 2008.

Source: How To Invest In Technology During A Down Market