Kirk, I could not agree more. I wish there was some kind of medicine that would cure me of the remorse from not having loaded up on FSELX a while back (and having backed off the time I put into following tech stocks). But as of Jan 24th I was blowing away FSELX for the year, so my view on this varies a bit with time. It has been a great fund, and for a long, long time. It is true that if you compare charts of it vs. AMAT, INTC, NOK, ALTR, TXN, and a bunch of other great (at least formerly great) tech stocks, it has underperformed relative to these. However, distributions are not included in most plots of FSELX, and if you had picked the wrong tech stocks, FSELX would have blown them away. One other advantage of FSELX is that Fidelity has a "deep bench", so to speak, and they rotate managers in and out of running this fund on a regular basis, so the risk of some wonder boy bailing and having the performance suffer is minimal.
At the moment I am torn between the idea of just putting all my money in a few great funds like this, and spending more time enjoying my life, vs. trying to capitalize on this incredible volatility by being focused on the tech sector now. The only thing from keeping me from moving into funds like FSELX right now is that during rebounds many tech stocks climb faster than this fund. So, tax effects aside, the time to buy into it may be when times are good again, as it tends to hold up better in downturns (e.g. fund is down only 2.5% for the year vs about 13% for the Naz).
This is a real interesting question though. For one thing, many people, and myself included, to some extent enjoy following tech stocks, so there is some entertainment value in that. Another argument is that one could just look at charts of FSELX as compared to various tech stocks like AMAT, TXN, NOK, ALTR, etc, and use a technical sort of black box approach. Forget that a fund is supposed to be safer because of diversification, and just consider them all as stocks. If one does that, then stocks like AMAT look better, especially during market downturns like this, when stocks like AMAT tend to rebound better.
Off Topic Even More: Is it just me, or are there others out there who feel that tech advances in recent years are just huge in magnitude? I was not around when radio was developed, or when the railroads were built, or when the printing press was created, etc., so it is rather hard to compare things. For me, the internet is just an incredible thing. For example, to be able to type this post right now, and know that people from various parts of the USA, and also from several different countries might be reading this in a few hours, sort of blows my mind. One thing about the internet that is very significant is the networking potential it creates. It might take a while for this to pay off for everyone, but in general, the more we have networked, the more our standard of living has improved. Someone pointed my attention to an article about a year ago that showed that inventions and progress for humans had a direct relationship between the extent of the networking that occurred. And, as an example of how much the pace of innovation has increased with time, they point out that it took about 300,000 years to go from the invention of the "hand axe" (i.e. large sharp stone) to the invention of the axe with attached wooden handle. So, according to this argument, there may be benefits to all of civilization from the internet that we can't even comprehend yet. I don't want to get in the camp of being too bullish, but I just wish to point out the basis for my preference for technology stocks as an investment vehicle. I was hit very hard like most other tech investors in the past year, but I hope that comparisons with past bubbles are at least partly incorrect because of the magnitude of the invention this time around.
John |
