Tech-stock explosion: How much is hype?

Thanks in large part to technology stocks that have seen meteoric returns, terms like "Nasdaq" and "IPO" are now almost as commonplace as "e-mail."

But this kind of high-profile success is precisely what worries some analysts and investors.

"It's really scary," says Aram Fuchs, CEO of the financial Web site FertileMind.net. "A lot of good, intelligent people are committing their life savings with only a vague notion that [an Internet stock] is going to be big, but they don't know the details that go into the fundamental analysis."

In a recent survey by US Bancorp Piper Jaffray, more than 75 percent of investors said they are confident the technology sector will continue to grow over the next 12 months. But only 36 percent surveyed actually own technology stocks.

"It's like people are trading baseball cards," says Mr. Fuchs. "One day it's Pete Rose ... and the next day it's Ken Griffey Jr."

When uninformed investors buy into the market "it's terrible for the economy," Fuchs says. "But temporarily we have been proven wrong where enough people have bought into [a poor company] and it went up."

A word of advice to free-flying dotcom investors, "markets do and will go down," Fuchs says. "We're at a peak in history, but that will change."

(c) Copyright 2000. The Christian Science Publishing Society

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