Recap of Saturday, Dec. 29

2002: A Tech Year?

2001 was another wild ride for technology stocks. For most of the year, the Nasdaq continued the rapid plunge that started in the spring of 2000. Then came the horrific acts of Sept. 11; remarkably, tech stocks have rallied to post substantial gains since the attacks:

• Since post-attack lows: up 39.6%
• Year-To-Date:  down 19.6%

Technology has certainly played a big part in the success of the war against terrorism. As we move forward with the war effort, will it signal a tech year?

Ned Riley of State Street Global Advisors says he likes the technology sector in 2002, "because there needs to be a total rebuilding of the infrastructure of the U.S. government, specifically within the intelligence community." And since tech stocks have weathered such a beating over the past two years, he does see big upside potential in the sector.

Dagen McDowell, Fox News Business Contributor, says that these stocks have come so far, so fast, that you might see a pull back in the first part of 2002, and any bad news that comes out of the war could hurt the stocks.

Hilary Kramer of the Cisneros Group says technology is the cornerstone of our strategy in the war against terrorism and she believes there is room for growth in the sector. "The war is not being fought with General Patton’s tanks and armor, but with unmanned spy planes,” she says.

Jonathan Hoenig from Capitalistpig Asset Management hammers the point that too much attention is paid to the broad market. He says the way to play the technology sector is to selectively find the best stocks; it’s a stock picker’s market, not an investor’s market.

Jonas Max Ferris just doesn’t see how the war is going to provide technology stocks with real earnings growth. And he notes that it has become fashionable within the investment community to say that Usama bin Laden doesn’t matter anymore, a notion that Jonas disagrees with. We could have another attack, sending stocks down again, he says.

Some members of the panel offered up their best ideas for the New Year:

Jonathan: Trinity Industries (TRN); Hilary likes the stock. Ned does not.

Hilary: AOL-Time Warner (AOL): Jonathan isn’t a big fan. Ned doesn’t like it due to pressure from Microsoft.

Ned: Nasdaq 100 Trust (QQQ): Jonathan says it isn’t diverse enough. Hilary thinks it is the best way to play the tech sector.

Mutual Fund Face-Off

Panel: Dagen McDowell and Jonas Max Ferris

Topic: New Year’s resolutions! Dagen and Jonas pick funds for 2002 that reflect their goals for the upcoming year.

Dagen wants to be a little more optimistic, so she thinks that the tech sector could ultimately make a positive move. She selects the Dresdner RCM Global Technology Fund (DGTNX). It has a minimum investment of $5,000, and will cost you $17.50 for every $1,000 you invest.

Jonas (being from L.A.) wants to lose some weight in his mutual fund portfolio by choosing a smaller fund. So he picks the FMI Common Stock Fund (FMIMX), with assets of $60 million. It has a minimum investment of $1,000, and costs $12.50 for every $1,000 you invest.

Money Mail

Dagen and Jonathan wrapped up the show by answering some of your investment questions.

Question #1: “Beazer Homes (BZH) looks like it is ready for a breakout. What do you think?”

Jonathan: The stock has had a great run in 2001, but he think the news is already out on the company and the stock has no where else to go.

Dagen: Rising mortgage rates could mean some tough times for Beazer.

Question #2: “I am 15 years old and have $1,000 to invest. Should I go with stocks or mutual funds, and what companies would you recommend?”

Dagen: Check out the Oakmark Fund (OAKMX).

Question #3: “Solectron (SLR) is taking a beating. What is your short-term outlook?”

Jonathan: When a stock is trading so near its 52-week low (like SLR), it usually means: "Stay away!"  But you might want to look to get into this stock at some point soon.

Dagen: If you get in, be prepared for a rocky ride.