existing market share? Does the share price accurately reflect the company’s growth? (For more on selling, see “You’ve Got to Know When to Fold ‘Em,” Moneywise, May 2000).
Don’t be afraid to let go of a lemon, or to change your investments as the markets change. Already, in-the-know investors are looking at the next hot thing. (pssst, have you heard the buzz about biotechnology?)
So you’re looking for online profits…
What are some stocks to consider for your portfolio if you’re keen on riding the Internet wave? We asked Dale Bryant, a financial advisor and president of the Bryant Group, a New York-based investment advisory firm.
Although Bryant is bullish on this sector-”It’s the only thing right now”-he looks for support stocks, the companies that build software, infrastructure and communications equipment rather than pure dotcom companies. “I try to deal with technology, the backbone of the Internet,” he says. Here are some areas you can look at to do the same:
Many big companies outsource their Website maintenance. Bryant’s choice? Exodus Communications (Nasdaq: EXDS), a provider of Internet system and network management solutions. Year-to-date as of mid-March, it had returned a whopping 927%.
Caching helps route information faster through a network of servers. Try Akamai Technologies (Nasdaq: AKAM), which provides global delivery service for Net content and applications, including its capability to protect sites from crashes due to user overload. It was recently trading at $284.75, up from its initial offering price of $165 at the end of October 1999.
Online data storage
As companies increase their Web presence, they have to store their data somewhere-like in a virtual warehouse. Bryant recommends Veritas Software (Nasdaq: VRTS), which designs, markets and supports enterprise data storage management solutions. It had soared 639.35% as of mid-March.
This is what allows technology to happen. Fiber optics is one of the hottest areas. Try Ciena Corp. (Nasdaq: CIEN), which is in the optical networking equipment market. Ciena has rocketed an amazing 532% for the year as of mid-March.
A pure dotcom?
Bryant has his eye on the soon-to-be-public Mercata.com, which allows consumers to hook up with each other through the Website and enables them to buy electronics, home and garden supplies and fitness equipment in bulk.
How much dotcom exposure can you stomach?
Do market ups and downs keep you from sleeping soundly at night? Do you follow every dip and spike on the tech-heavy Nasdaq index? Or are you in it for the long-term and ready for the ride? Financial success often means tailoring your portfolio to your personality (in this case, your risk tolerance when it comes to your life savings). Bryant, portfolio manager for the Bryant Group, recommends three model allocations based on your investment profile:
Conservative: For preservation of capital with some growth, Bryant recommends 50% in equities (blue chips such as Wal-Mart, IBM and GE), 40% in bonds and 10% in cash.
That’s it. Period. No dabbling in Internet stocks.
Moderate: Bryant suggests 70% in equities (broken down as 40% blue chips, 15% telecommunications, 15% Internet infrastructure), 25%