By
That's easy to understand -- there are some powerful companies included in the NOW 50. Then again, it also contains some very highly valued companies that have had huge run-ups in 1999. Is 2000 the year they revert to more normal valuations?
That topic is under debate right now in Dueling Fools, so if you are interested in the NOW 50, you might want to check that article out. Don't ask me for my opinion -- I'm firmly on the fence.
I am a bit worried, though, by the volume of mail we have received from people who want to invest in the NOW 50. It's flattering, I guess, but very, very premature. Folks -- it's just a list of stocks. And I helped pick 'em (that should cure most of you).
Right now, The Motley Fool is the only organization covering the NOW 50. It's our baby, and a baby is what it is. How long has the S&P 500 been around? Since 1926. The Dow is over 100 years old.
Maybe it's the magic word "index." Yes, we do teach that beginning investors should stick to index funds, but we really had in mind funds that mimicked indices that were proven -- not a week out of the box.
Folks, we don't even know if this "index" will track anything. We hope it will. It was certainly our intention to create an index of the new economy that is sweeping the world. But it will take some time to figure out if we've got something here.
Looking at that list of companies I can see how an investor might hope for a convenient way to buy a piece of all of them, even if not as an index investment. There is more, far more, to investing than picking cool companies, though. Our Rule Breaker and Rule Maker portfolios spend days and weeks and often months analyzing companies before buying one.
But the NOW 50 wasn't designed as an investment. It's NOT a portfolio -- not by any means. When we selected those 50 companies we looked at them as companies -- not investments. We expect them to be good companies to invest in, but we did not pick companies because we thought that they were going to "go up." We picked companies that represented the emerging economy, companies that either supply new technologies or use them effectively.
We paid absolutely no attention to the companies' current prices or their near-term (two to five years) price prospects. Really. We focused on companies that we thought would be leaders in 20 years. That may make them good investments, but it certainly isn't anyone's idea of a good way to design a portfolio.
Most of these companies are not undervalued, and if there really is a big Internet bubble or high-tech frenzy that is heading for a major correction, they could turn out to be pretty bad investments -- especially in the near term.
So let's let the baby grow up a bit. Next year she'll be walking and a few years after that she'll be begging for tap shoes. Maybe then it will be time for NOW.
Fool on and prosper!