TECH STOCKS (n, pl.) 1: An undefined group of common stocks of companies vaguely associated with the already so-helpful term, "high technology." 2: An amorphous collection of stuff you invested in that you can't be any more specific about because, well, you couldn't even if you really tried.
Ambrose Bierce, before he disappeared mysteriously in Mexico in 1913, wrote among other works one that I treasure on my own shelf, The Devil's Dictionary. In this dictionary, one comes across many wonderful and devilishly humorous ways of redefining (truly defining?) words. Two typical entries:
HAPPINESS, n. An agreeable sensation arising from contemplating the misery of another.
LAWYER, n. One skilled in circumvention of the law.
My own Bierce-like attempt (though without the requisite venom or superb wit) to define TECH STOCKS headlines this article.
"Guys, what do you think of tech stocks?" we are frequently asked in interviews.
"Will tech stocks ever be back in favor?" reads a print headline.
"What's happening to tech stocks?" a question asked over and over on our Motley Fool Radio Show for the past 12 months. To which I ask back:
"What are tech stocks?!"
Now, I know the answer. And you do too, if you're a regular reader of this column. Because on March 29 of this year our very talented Tom Jacobs put up a wonderful article in this space, entitled "Yes, We Have No Tech Stocks." The "we" refers to our Rule Breaker Portfolio, which many people would consider to be loaded with "tech stocks." Not only was Tom extremely Foolish in the sense that he provided a contrary answer that was steeped in common sense and lightness of tone, but in that piece he actually defined the phrase "tech stock"! When or where else do you ever see that done?
So I know the answer. And if you don't already, go back and read Tom's answer, because that IS what a tech stock is (and the Rule Breaker Portfolio presently contains none of them).
But, does the world at large get it? Do the talking heads? The headline copy guys? Our nation's journalists, analysts, investors? The (threadbare phrase!) American people? I don't think so -- not by a long shot. (But determine that for yourself -- keep your ears open.)
What I primarily wish to point out in this space today is that the phrase "tech stocks" is one of the emptiest, most misleading, flea-ridden, sorry excuses for a reification we have in our popular culture today. I'm not saying it's alone, or the ultimate example. I'm saying it's up there. If you have your own topper, I'd love to hear it in our Rule Breaker Beginners discussion board. But until I hear something better, I'm calling this a King Kong of Fuzzy Thinking.
The word "reification" first presented itself to me through the writings of Stephen Jay Gould, specifically his book The Mismeasure of Man, which points out that IQ (as in, intelligence quotient) is a classic reification. "Reification" is the act of making something that is in fact abstract -- in a sense, unreal -- into a material or concrete thing. Intelligence quotient puts a number on a brain. Is that number real? Does it represent the truth? The whole truth? Is it permanent? Is it material and concrete? Most of Gould's answers to those questions are nos, and he reflects in his book on a period in history in which scientists likewise thought (incorrectly) that brain size and weight correlated directly with "intelligence." All those brilliant elephants walking around....
I don't mean to suggest IQ is meaningless (neither does Gould), and similarly, I don't mean to suggest that tech stocks have no significance. But they are a reification. Because there IS no genuinely agreed upon group of stocks that are "tech stocks" and those that are not. In fact, no two people on earth would agree about which stocks actually go in the abstract box and which don't. Thus, this phrase used as a tool for mass communication spreads instead mass confusion. Is eBay (Nasdaq: EBAY) a tech stock? Is Gateway (NYSE: GTW)? What about AT&T (NYSE: T)? AOL Time Warner (NYSE: AOL)? IBM (NYSE: IBM)? Amazon (Nasdaq: AMZN)? Yahoo (Nasdaq: YHOO)? Red Hat (Nasdaq: RHAT)? Apple (Nasdaq: AAPL)? Etc., etc.?
Unfortunately, many now-disappointed investors got excited about "tech stocks" and bought "tech stocks" last year. And now, despite a market that has firmed for now (Amazon.com has about doubled in the past month -- but oops, is that a tech stock?), they're worried about ever investing again in those risky "tech stocks."
The right approach? As usual, in Fooldom: Know your companies. Think in terms of individual stocks, rather than stock markets. Think in terms of businesses, businesses that you really know quite well, instead of "stocks." Use our wonderful discussion boards to test out your thinking against the wide experience and points of view available here, the world over.
And prefer the material to the abstract, and specifics to generalizations. Ask "why?" a lot and make people define their terms more. And browse Ambrose Bierce at least once a year.
And Fool on.
David Gardner, May 10, 2001
David Gardner is co-founder of The Motley Fool. The Fool is investors writing for investors.