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June 21, 2003 High tech investing has taken an extreme rollercoaster ride during the past few years. This sector of the investment community would start to climb, then get slammed with the other stocks when items like the Asian economic flu hit, or the bailout of the large hedge fund had to be conducted. The tech sector shrugged off these temporary setbacks and climbed to an all- time high as the century ended and a new one began. Then the bubble burst. The dot.com companies started collapsing, and accounting problems and lack of real income made many flee the high tech sector, if not the entire market. Money started pouring out of stocks into mutual funds and other low risk safety areas. The media jumped on board, criticizing the tech sector and soon everyone was kicking it around. The tech sector has spent the past three years and a half years in the doghouse, highly out of favor. There is no question that tech investing took a close shave. However, during the past few months, an interesting thing has occurred – like Sampson, tech’s hair has started to grow back. Almost unnoticed, tech is starting to make some gains. And let’s be realistic – technology is not going to go away. In fact, tech is going to play a strong role in the future, and tech investing will come back strongly. All of the people who have put off buying a new computer, printer, laptop, or liquid crystal monitor will have to get a new computer sooner or later. Software continues to get fancier, as do the games played on computers. The LCD screens are better on the eyes, the new laptops are coming out ready to go for WiFi, and people are going to upgrade at some point in time. The question is simply when, and the answer is in the near future. The tech companies who have made it through the downturn will emerge even stronger than ever due to the leanness of their current operations (costs have been trimmed to stay afloat) and the bottom line will emerge better than before. If you look around closely, you will notice the signs that high tech is quietly gearing up again. Apple Computer will be presenting a new operating system this coming week code tagged as ‘Panther’ which will probably also contain a faster microprocessor for the Macintosh, the long awaited G5 chip. The Internet is going to become more and more a medium of exchange, commerce, and high tech growth. As one CEO has pointed out, we are just beginning to tap into the potential that the Internet has in store. Cell phones are becoming fancier and more ubiquitous. Red Hat has finally made a profit, and all kinds of interesting things are going on in high tech. Sure, there are the areas that fall short (the Segway for example) but in large part marketable new items – exciting and useful, continue to gain a stronger foothold in the modern consumer’s life. For example, High Definition Television sets will become the standard in a couple of years instead of a luxury item, and a whole lot of money will be made in the TV sector. The high tech sector is going to be quite busy in the coming years, and savy investors can make quite a bundle by ignoring the pundits who continually bash this type of business. Another interesting side note to the resurgence of high tech is the fact that many of the companies that were predicted to die – Amazon, Red Hat, Yahoo!, etc., have not died and are still going, gaining and coming on stronger. Even the telecommunications sector has its winners, companies such as CenturyTel, who pulls in consistent gains on its operations (a very nice 39% this past quarter, by the way). As tech emerges from the shadows again, these companies will most likely come roaring to the front. And new companies will also emerge, companies with a good idea, a product, an add-on to an existing technology, which will prove to be successful with the consumer. Yes, tech has been knocked down to a point where it could be considered dead by some, but don’t be surprised if it starts to rise, like a phoenix from the ashes, to take flight again. Not all companies will fly high, but they will fly again, and some indeed will soar. You can benefit from some astute investing at this inflection point in the roller coaster cycle. Remember, as a rollercoaster goes down, it also goes back up again. ------------ About the author: Dwayne Hines currently has 12 books selling in major bookstores and writes for major magazines such as Physical and FitnessRX. Email Dwayne Hines: dhines@3dinet.com Comment on this column in the forum. Tell a friend about this site! ------------ |
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