YIN AND YANG STOCKS

摘要

Tech stocks are back. So, too, is the problem that frustrated so many investors during the late 1990s boom: how to size them up. The first hurdle is the cost because, once again, tech stocks are hugely expensive by the usual measures. Those in the Standard & Poor's 500-stock index are priced at 33 times their estimated 2003 earnings, a 79% premium to the index as a whole. Shares of Internet leaders Amazon.com and Yahoo! Inc. are off the radar at 70 and 87 times expected earnings, respectively. What's a tech investor to do? Start by dividing stocks into two categories: those for trading and those for investing. With trading stocks, you make money by figuring out whether other traders will keep buying or start selling the stock and positioning yourself accordingly for a few weeks or even days. By contrast, with investing stocks you aim to buy into a company at an attractive price, given the worth of its assets and likely future profits, regardless of when the value will be recognized by the market. This way, you can steer clear of overpaying for fashionable dogs.