The Secrets of Investing in Technology Stocks

Jane M. Wilson is a Toronto-based chartered financial analyst in the
investment business.

“One technology analyst remembers the days in 1987 when the way to
beat the market was NOT to have anything invested in the science and
technology arena.” Despite this sobering retrospection, this book
still approaches the “hi-tech” sector with optimism. Given the
author’s statement that the average price/earnings ratio for tech
companies was 17 at the time of his writing, this is understandable.

From choosing what to and what not to read in analysts’ and
companies’ reports, to the ABC’s of options, to the history of the
NASDAQ, the book covers stock investing in general. This part may be
jejune to the knowledgable investor, but the many quotes from both
business and professional investment managers, as well as several
delectable bits of wisdom, are a good investment in time. Included are
some of the market’s familiar idiosyncrasies (such as the January
effect) and some not-so-well-known ones.

Different segments of the technology business are then explained.
Through discussion of some selected firms, the author outlines the
different challenges and business strategies in hardware, software,
networks, biotechnology, and other sectors. Readers should not expect a
detailed directory of companies, let alone comprehensive coverage of
Canadian firms. This is definitely a how-to not a where-to invest book.
Companies, largely all NASDAQ traded, are listed by ticker symbol only.
While a U.S. bias is understandable given the industry’s
concentration, it is disappointing to see notable omissions of Canadian
entrants.

For information, Trapunski suggests some journals and Internet sites,
though in hindsight, caveats about the latter might have had more
emphasis. For those daunted by an arena where “you can spend 25 hours
a day in researching and picking investments,” specialized Canadian
and U.S. mutual funds are listed. He does not tell us how or where to
find the next Nortel or Microsoft, but readers will at least come away
with a better understanding of what these stock-market darlings actually
do. Trapunski writes on finance and technology and is a broadcast
journalist and producer.