Stock Smarts: A Stock Revolution!
Call it a stock revolution – just about the time risk became a “four letter word”, the riskiest stocks began to take off. Internet, biotech (search) and computer stocks ruled the market for the first half of 2003:
Internet UP 52 percent
Biotech UP 34 percent
Computers UP 19 percent
Dow UP 7.7 percent
Will that trend continue through the rest of the year?
Jonathan Hoenig of Capitalistpig Asset Management says the trend actually began in the fourth quarter of last year, and he thinks it will continue. He says Internet, biotech, tech and telecom is where the action is right now, and he thinks stocks in those sectors are headed higher from here.
Hilary Kramer of A&G Capital disagrees. She says a new group of stocks is ready to take off in place of those high-risk plays. She believes dividend yielding stocks that people have been afraid to buy, like Bristol-Myers (BMY), El Paso (EL), or Verizon (VZ), are the ones they will gravitate to now.
Jonas Max Ferris of Maxfunds.com says he does not think the trend in high-risk stocks will continue. He says investors need to recognize that these stocks have been driven higher on unrealistic earnings growth expectations and should take profits before they disappoint.
Adam Lashinsky of Fortune magazine says tech will deliver on growth and earnings but the price gains are already baked into the stocks. He agrees with Hilary that people will go back into dividend yielding stocks that have not performed well, but he says the reward will not be as big as the reward investors have received for investing in tech and biotech this year.
Wayne Rogers of Wayne Rogers & Co says the trend toward risky stocks makes him a bit nervous, but he thinks it will continue for a while longer.
Be$t Bets: No Gut$, No Glory!
So which stocks are set to bring glory to you and your wallet for the rest of 2003?
Hilary's Guts & Glory Play: Microsoft (MSFT)
52-week high: $29.48
52-week low: $20.70
Thursday's close (7-3-03): $26.45
Hilary owns shares in Microsoft.
Jonas says this stock has been dead through the whole tech recovery and he doesn’t see it taking off anytime soon. Adam says Microsoft should see slow growth, but he doesn’t see “explosive” growth in Microsoft’s future.
Adam's Guts & Glory Play: Micron Technology (MU)
52-week high: $25.14
52-week low: $6.60
Thursday's close (7-3-03): $12.81