Bits & Bytes
by Jim Stevens (JimStevens@aol.com)
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. (Nasdaq: YHOO) 20.71% America Online (NYSE: AOL) -9.47% Sun Micro (Nasdaq: SUNW) 14.45% EMC Corp. (NYSE: EMC) 15.88% Oracle Corp. (Nasdaq: ORCL) 15.65% Int'l Bus. Mach. (NYSE: IBM) -2.51% Intel Corp. (Nasdaq: INTC) 8.70% Dell Computer (Nasdaq: DELL) 13.41% Cisco Systems (Nasdaq: CSCO) 10.77% Compaq Computer (NYSE: CPQ) 9.97% Texas Instruments (NYSE: TXN) 8.61% Lucent Tech. (NYSE: LU) -6.03% Microsoft (Nasdaq: MSFT) 12.66% Motorola Inc. (NYSE: MOT) 13.00% Hewlett-Packard (NYSE: HWP) 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!