Fool.com: Bits & Bytes (Workshop) January 25, 1999

<FOOLISH WORKSHOP>

Bits & Bytes

Burlington, VT (January 25, 1999) -- Greetings, technology buffs and fans of the Bits and Bytes Portfolio. Tonight we check in on the Workshop's mini-sector fund of large capitalization high tech stocks. First I'll refresh your memories and fill in new visitors. The Bits and Bytes port is a mechanical screen that selects the 15 companies with the largest market capitalizations that are designated as being in the following sectors by the Value Line Investment Survey: Computers & Peripherals, Internet, Software, Semiconductors, and Telecommunications Equipment. It's that simple.

These stocks have really had a nice run over the recent months and years. An investor would have done very well to make this sector a part of his or her portfolio. In my Three Experimental Screens daily Workshop report, I fleshed out a 15-stock hypothetical portfolio as of the 12/31/98 year end data. Here's the latest performance of that port, through last Friday's closing bell:

Yahoo! Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %>    20.71%
America Online <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOL)") else Response.Write("(NYSE: AOL)") end if %>    -9.47%
Sun Micro <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SUNW)") else Response.Write("(Nasdaq: SUNW)") end if %>      14.45%
EMC Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EMC)") else Response.Write("(NYSE: EMC)") end if %>         15.88%
Oracle Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ORCL)") else Response.Write("(Nasdaq: ORCL)") end if %>   15.65%
Int'l Bus. Mach. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %>  -2.51%
Intel Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %>     8.70%
Dell Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %>  13.41%
Cisco Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CSCO)") else Response.Write("(Nasdaq: CSCO)") end if %>  10.77%
Compaq Computer <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPQ)") else Response.Write("(NYSE: CPQ)") end if %>    9.97%
Texas Instruments <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TXN)") else Response.Write("(NYSE: TXN)") end if %>  8.61%
Lucent Tech. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %>       -6.03%
Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %>      12.66%
Motorola Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOT)") else Response.Write("(NYSE: MOT)") end if %>     13.00%
Hewlett-Packard <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HWP)") else Response.Write("(NYSE: HWP)") end if %>    1.92%

Average gain/loss (all 15)     8.52%
Top 5                         11.45%
Top 10                         9.76%

The end of last week showed a substantial hiccup in the stocks. For the year so far, they are whooping up on the benchmark Standard & Poor's 500 Index, which is up just a fraction of a percentage on the year.

I ran the screen once more on the most recent 1/20/99 Value Line update. The stock list remained the same as the "1999 Start" stocks listed above. Here it is, listed with 26-week total returns as of last Wednesday in descending order.

Yahoo! Inc.        196.45%
America Online     127.04%
Sun Microsystems    15.32%
Oracle Corp.        96.14%
EMC Corp            92.77%
Intel Corp.         67.96%
Texas Instruments   63.78%
Cisco Systems       61.61%
Dell Computer       55.91%
Int'l Bus. Mach.    53.10%
Compaq Computer     50.34%
Microsoft Corp.     39.29%
Motorola  Inc.      36.50%
Hewlett-Packard     30.29%
Lucent Tech.        14.89%

A word of friendly caution: these sectors can really go up in a hurry, and that means they can deflate just as fast -- just look at Yahoo over the last week! This screen is not for those with weak stomachs, and it isn't backtested. It can serve as a nice initial screen for further research, though, or for selecting some "tech" components for an otherwise diversified portfolio.

Have a great week!

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