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Strategies & Market Trends : 50% Gains Investing
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To: chip who wrote (29885)4/20/2002 11:31:57 AM
From: Dale BakerRead Replies (2) of 118717
 
Many SI posters like to paint pictures with extreme declarations and assertions. The key lesson for technology and many of its sub-sectors is that they are, at best, cyclical. Every niche - PCs, servers, enterprise software, network gear, fiber optics, wireless - went through surges in demand followed by crashes and recessions.

I would use the "dying" word in a temporary context. A mock portfolio of fiber optics stocks I assembled in July 2000 for tracking purposes is down 93%. That is more than just a bubble bursting. The sector "died" for all intents and purposes as an investment until the next wave of demand comes along.

I would not own JDSU now unless I could sit on that investment comfortably for 5-10 years.

The Internet reached a plateau. The catalysts to take it further (broadband to the home and wireless device) did not materialize anywhere near as fast as predicted. No doubt, they will catch up and spark a new investment boom we can all play.

But the main, expensive lesson from the past two years is that chasing falling knives in "dying" sectors can cost you a lot of money. If someone had snapped me out of the tech trance 18 months sooner, I have no doubt my portfolio would be at least 50% higher than today. (I have clawed back to September 2000 portfolio levels now but need another 20% to match the March 2000 blowoff top).

Live and learn.
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