The Future of Tech Stocks (CNN-fn Article)
Buy and hold technology investors need to look at long-term trends
October 7, 1998: 9:50 a.m. ET
NEW YORK (CNNfn) - The rapid rise and fall of many technology stocks can make it difficult for long-term investors to predict the future of the sector, but some trends make the crystal ball more clear.
Nowhere is short-sightedness more evident than in the technology area, where Wall Street is currently zeroing in on upcoming third and fourth quarter earnings.
The result? Wild gyrations in most areas of high tech shares and a Nasdaq Composite which can't seem to get up off its knees and form a solid rally.
Average investors who've chosen to follow the "buy and hold" strategy face a difficult dilemma with all of the tech turmoil going on.
The fast pace of the sector has flattened many formerly-praised companies (remember Pointcast?). Long-term types are left to wonder if they'll be holding onto the next casualty or whether to move from one tech stock to the next.
Internet is the key
"Buy and hold" investors who have a craving for tech stocks and the higher returns they can bring don't have to give up on them and settle for the more reliable -- and boring -- stocks. They have an ally in the Internet.
The rise of the Internet has created a driving factor behind technology stocks and, despite some downturns, stock watchers like Alan Loewenstein think it will continue to drive related stocks higher over the next five to seven years.
"The Internet is the one area where you're going to have the most explosive growth," said Loewenstein, an assistant portfolio manager for John Hancock's Global Technology Fund (NTTFX).
Networking stocks will be one of the beneficiaries of this, he said.
That's right, networking stocks. The ones that have been battered recently because some telecommunications companies have said they won't meet their earnings targets because of slowdowns.
"On the data networking side, if you're going to have the Internet be more of a mainstay, then you're going to have to put in the infrastructure," said Loewenstein.
Cisco Systems (CSCO) and Ascend Communications (ASND) should benefit. Investors who are interested in these stocks will also find them cheaper to buy as Cisco and Ascend share prices have declined recently.
However, Internet stocks won't be an across-the-board sure bet, said Roger McNamee, a general partner at Integral Capital Partners.
......
cnnfn.com |
