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HOW TO EVALUATE HIGH-TECHNOLOGY STOCKS
High technology is the last frontier in American business.
Many of the new businesses revolve around some type of technology,
whether it is direclty computer-related, communications-related or
somehow tied in with the "Electronic Superhighway", whose arrival
we all eagerly anticipate. Although tech stocks have declined sharply
in during bear markets, they have proven to have outperform other stocks,
re-bounding more sharply in subsequent recoveries.
There are three major advantages that point to small companies:
1.) They are generally free from government regulation because
their earnings are often in a new field.
2.) The company stands to gain a lot of ground if the come up
with a unique idea. The growing market will be theirs to
3.) The impact their earnings will have on their financial status
will be considerable... therefore a success can increase their
There are several rules to follow if you choose to be an investor in this
high risk market. Firstly, do not be fooled by the size of the company.
It is important to investigate the high-technology expertise of the firm
and secure that it is a meaningful part of the firm's business.
Secondly, it is vital that the company is serving a current social need
in the marketplace.
For example, cable was first intro-duced in the 1960's and interested
investors long before it could draw subscibers.
Look for companies that are operating in the black. Companies that offer
teriffic scientific break-throughs but operate at a deficit are just too
risky. It is also important that you ignore market indexes. Companies with
technological superiority are not tied to a stock mar-ket environment over
Lastly, keep current on all technological innovations. Buy trade magazines
and read scientific papers and investment guides that deal with technology
and technology-related fields.